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re: What’s bad about the price of oil dropping?
Posted on 3/9/20 at 9:48 am to Parmen
Posted on 3/9/20 at 9:48 am to Parmen
It’s bad for oil and gas stocks as well as for people employed in that industry. This is a Baton Rouge based message board, and the Louisiana budget is impacted significantly by the price of oil. In addition, many posters live in Houston and work in the oil industry there. Low prices mean less activity, less work, and fewer jobs until prices come back up. While low oil prices are good for most everyone, they’re very bad for a fairly large number of people in Louisiana, Texas, Alaska, etc. Considering those people make up a large percentage of the posters on this site, it’s relevant. While great for the nation as a whole, low oil prices are bad for Louisiana and Texas.
1
Posted on 3/9/20 at 10:07 am to kingbob
quote:
While great for the nation as a whole, low oil prices are bad for Louisiana and Texas.
With oil and gas being a prominent portion of EVERYONE'S 401K retirement fund, there is a point at which oil prices being too low can be financially harmful to their retirement nest egg. There is a balance in there somewhere.
Posted on 3/9/20 at 10:15 am to mmcgrath
quote:
And that goes for windfalls in renewable energy as well
You mean government grants? Those are about the only windfalls I’ve seen in “green” energy.
Posted on 3/9/20 at 10:31 am to Parmen
Low oil prices hurt the economies in Texas, Louisiana, Oklahoma and many other states. It has trickle effects to every industry that provides services to those populations (real estate, construction, automobiles, etc), it hurts state budgets that depend upon the tax dollars of services (industrial and personal), it hurts construction projects related to alternative energy (yes - solar and wind cannot compete with $30 oil), etc. People tend to only see their own little world, but killing the economy in an industry as big as the oil industry will have ripple effects over the entire country. I can go on and on, but imagine if Chevron, ExxonMobil, Shell....all reduced orders for vehicles, steel products, services.... by 80%. Imagine what would happen to struggling retailers and restaurants if the oil industry suspended capital and expense projects and laid off the contract work forces. What would happen if everyone whose salary depends either directly or indirectly cancelled their vacation, large purchase, repairs, etc for the next few years?
This post was edited on 3/9/20 at 10:34 am
Posted on 3/9/20 at 7:31 pm to Ramblin Wreck
Bob Dudley recently retired as CEO of BP. He made a comment recently that was pretty eye-opening - that “ BP, Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp and Total SA are “only responsible for producing about 8% of the world’s oil. If we were all driven out of business that oil would still be produced” by national oil companies and other countries“ (from Bloomberg). Basically, they could all go out of business but O&G will still be produced by the national oil companies...
My fear is that the companies overreact to this cut. We are already understaffed with previous cuts and I’ve heard that many budgets for this year were expecting near $60 oil. With the warm winter and gas prices below $2, if you had gas in your unconventional, you were already losing money and new drilling had stopped. As the Initial Production (IP) in the first 2 years determines if you can break even on a gas well, many wells that were drilled and shut in aren’t going to be completed. It just might take a year or two for the current supply to catch up to demand...
My fear is that the companies overreact to this cut. We are already understaffed with previous cuts and I’ve heard that many budgets for this year were expecting near $60 oil. With the warm winter and gas prices below $2, if you had gas in your unconventional, you were already losing money and new drilling had stopped. As the Initial Production (IP) in the first 2 years determines if you can break even on a gas well, many wells that were drilled and shut in aren’t going to be completed. It just might take a year or two for the current supply to catch up to demand...
Posted on 3/9/20 at 7:41 pm to Parmen
quote:
What’s bad about the price of oil dropping?
Some hourly offshore types will get laid off. Other than that, nothing.
This post was edited on 3/9/20 at 7:42 pm
Posted on 3/9/20 at 7:53 pm to 0
Many oilfield service companies here along the gulf coast have been barely hanging on for the last 4 years or so,the news of $40 dollar or $30 dollar oil will shut some of us down,layoffs already happened last week.
Posted on 3/9/20 at 8:09 pm to OBReb6
Wrong!
Posted on 3/9/20 at 8:26 pm to omegaman66
quote:
The price of transporting goods will go down.
quote:
The price of everything will go down.
This is 100% false. Gas prices have been pretty cheap for 6 years. Groceries and other goods aren’t getting cheaper because of it.
Posted on 3/9/20 at 9:09 pm to Bayoutigre
Apache and Oxy recently had layoffs... I’m sure Oxy is really happy they overpaid for Anadarko to get into the unconventionals...CVX just took a 6b write down due to their unconventionals after not buying Anadarko...
Posted on 3/9/20 at 9:13 pm to 0
quote:
Some hourly offshore types will get laid off. Other than that, nothing.
Posted on 3/9/20 at 10:02 pm to OBReb6
Sounds like you’re not high enough in the food chain to know that budgets for this year are being slashed. If your family has a budget for this year but all your kids have health issues pop up that drain your budget, you don’t just keep spending as usual because it was in the budget. You find ways to cut back.
One oil giant is barely spending this year and investors are concerned. Another is spending like crazy with a long term plan and investors are freaking out too.
One oil giant is barely spending this year and investors are concerned. Another is spending like crazy with a long term plan and investors are freaking out too.
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