According to financial expert Mickey Cargile, the "outlook is very bright." He said that outlook includes the price of oil.
"Whenever I look at the price of West Texas crude, I believe there's a floor about $80 a barrel, so I don't think we'll go below that in 2013," said Cargile, founder of Cargile Investment Management.
Cargile, whose oil price predictions turned out to be spot on last year, said the price of oil could go as high as $120 a barrel, but he added, "I think fair value is a little higher than last year, probably somewhere around $91 or $92 is the average price that we'll see for the year."
Although some predict we could see oil prices drop significantly due to excess capacity, Cargile disagrees saying Europe has stabilized and China is in recovery, creating more demand worldwide. But it doesn't stop there. "The Saudi's have shown that they are in a position where they want the higher priced crude and seem to be willing to cut their production to keep prices higher," added Cargile.
Looking at the fiscal cliff bill Congress passed this week, Cargile said it poses some challenges, but that there is some good news.
"The good news for us locally is that it seems that business taxes have not changed," he said. "Although we haven't seen the bill yet, my understanding is the tax breaks for drilling for oil will not go away and will be continued for this year."
With all this in mind, is it a good time to invest in our local energy industry? According to Cargile, the answer is yes.
"My particular area (is) publicly traded stocks, so any of our local companies give good management and great leverage on your money," he said. "Also, those involved in North Dakota have that same leverage."
On the flip side, Cargile said you may want to avoid investing in a service company at this time. He said he's somewhat concerned with their ability to raise prices, so he's staying away from them for now. However, he does think they'll be good investments in the future.
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