No. There are a multitude of reasons for the decrease in unleaded gasoline prices, not the least of which is a rapidly strengthening dollar against foreign currencies, coupled with an oversupply of crude being injected into the global market. These factors, combined with forecasts for slowing global growth, have led to a drastic reduction in the price of crude, which is the primary cost driver for gasoline (also refining capacity which is another story).
I wasn't referring to the airline industry, sorry. We aren't going to see eye to eye here, so I'll just respectfully disagree with what you are saying and move on.
I've got a bit of skin in this game, but I'll say this. The US economic system is designed to be self correcting.
I think its funny that as soon as crude goes down, people imagine a dark shadowy OKC with nothing but tumbleweeds on Sheridan and an empty I-40. This is a scenario that will simply never happen. Everybody is VERY quick to panic when crude falls, but good god, wait a few months to see what happens before we declare OKC a thing of the past.
If all of the big 3 OG's close doors tomorrow (DVN, CLR, CHK), OKC will continue to function much like it did before. That only accounts for what.... about 7,000 workers who earn about 10-20% above the average salary? It isn't going to stop the city from functioning. Yes, it would be a hit, but you know what? OKC has recovered from worse. Way worse. We'll do it again if we need to.
The largest employers in OKC aren't even in Oil. Tinker, OU, the Mike Monroney/FAA, Boeing, and the 1000's of hospital workers, education workers, state employees, etc aren't affected by falling crude. Plus, think of all the benefits that low oil will have to other OKC area employers like the automobile industry.
OKC will always be here, and OKC will always have jobs.
Somewhere, there is an investor presentation from one of our big 3 that shows how every single supermajor (Exxon, Chevron, etc) has had slowly falling production for last 8-12 years. This is not good. World demand for oil isn't going to dry up all of a sudden and our big 3 have some very promising projects in the future. The nature of the "supply chain" in O/G takes a while to adjust to market prices. You can't just call the rigs and all the trucks en route and tell them to go home. It takes a few months to adjust production, at least. both DVN and CHK are in extremely good financial shape right now.
The people have OKC have already raised money to build the MAPS III projects. They will be built. The nation will see our investments in quality of life projects and want to emulate our success. If O/G dries up tomorrow, you've got tons of super cheap office space that could attract other large employers. Once again, the economic system is self correcting. Everybody needs to quit freaking out. Enjoy the extra bucks you've got right now, because gasoline won't be this cheap forever.
I don't recall anyone predicting the death of OKC. But OKC will definitely see a decline in capital spending. A number of popular projects may be pulled back if the crude price trajectory continues. The billions of dollars invested in OKC over the past 10 years have largely been the result of oil company prosperity. Yes, it was kicked off by a well-timed MAPS. But most of these projects would have never happened without energy dollars.
OKC suffered for many decades, perhaps most of my lifetime, with a depressed economy. We've now had a few great years. I have really loved seeing the local economy growing, and it has been especially important that this growth includes aerospace, retail, tech, medical, and other industries outside of energy. OKC needs a good 35 more years of sustained and diversified growth. Certainly, however, a slow down will follow when a substantial engine is carved out of the economic model.
Lastly, OKC's energy-related growth is not correlated to an economic slow down in other geographic areas. There may be anecdotal evidence of such, but it is merely anecdotal and not substantive. Other industries and other geographic areas have performed well even while energy prices spiked and OKC prospered. Conversely, there have been severe economic strains in other areas even while energy prices were at historic lows and OKC suffered. Our local economy as well as that of the entire nation and world works more like a current and less like a tide.
The problem with the idea that oil can stay way low and OKC will continue on its current trajectory (not be okay, but continue the rapid growth it is seeing) is that it's not about just the big guys, it's about everyone involved in the E&P eco-system. OKC is not going to become a ghost town even from a major oil-depression, but there are hundreds of millions of dollars of development sprouting up in downtown alone, and if OKC can maintain its trajectory, that will turn into billions over the coming 10 years, and is already in the billions if we're talking about all of OKC. Much of that is occurring because of the immense amount of money that the city is gaining from these large E&P businesses.
There are three ways for an economy to grow: refining of raw resources/increased efficiency in their use (Innovation), selling of resources for profit (Exportation), and influx of external resources (Importation). OKC is currently growing from all three of those elements. But E&P is the major private player in the exportation category, and arguably the only private player. We have a few regional financial institutions, but the growth of those companies is very related to the growth of the E&P companies those financial institutions have invested in.
If OKC takes a big hit to our exports, then we have less capital to work with to grow. The slower we grow, the less attractive we become making importation more difficult. As a bonafide city, we will always have innovation available as a means to growth. In fact, we are very strong in that regard. Our exports are pretty good, but we could stand to have more in different fields aside from just E&P. Our imports have never been strong and are just now starting with projects like LIFT/21 c./Clayco, and with companies like Enable being headquartered here. That's the kind of growth we need more of, but importing as a means of growth is the most difficult to achieve because those who are willingly bringing their resources to the economy need to see both innovation and the opportunity to export in order to take the risk here.
It is in that regard that E&P is so important, particularly for the private sector of OKC's economy, and why a decrease in prices is worrisome for us. There's no reason to be doom and gloom about all this, but neither should we be unalarmed and ignorant of what's at stake should this be a prolonged issue.
^
The problem with this is that oil is not "way low." IMO this country has become completely detached on what constitutes cheap oil. At $67/bbl (what it is currently trading at as of 1 PM today), oil prices are higher than they were when Devon broke ground on its tower in 2009, or when the Thunder first started playing in 2008 (of course they were much higher when the relocation was finalized, but the support was still there afterwords). At the current price, a handful of marginal fields are not profitable, but the vast majority of conventional fields and even some unconventional ones are. Also, this does not factor in the slowly increasing price of natural gas, currently about $4.35/mcf
The biggest risk in the short term for OKC is increased M&A activity, much like the rather random Hallibuton/Baker Hughes deal. Not saying that local companies are going to get bought out, but the risk is substantially higher now. In the long term, however, I am not worried. This is not 1979, where the oil "shortage" was fueled largely by spiteful OPEC members creating an artificial market. The world has entered into a new phase of E&P exploration and demand elasticity. Hell, AEP got $500 million last week for new aquisitions. My own employer recently completed a succesful capital program as well. If investors were worried about the long term position of energy would these things be happening? Nope. That's the key here...LONG TERM.
As far as all of this effecting OKC, I heard these same arguments about NYC when the stock market crashed in 2008 or about DC in 2012 when steep budget cuts were enacted. True, both events had a slowing effect on their local economies. And yet, both cities are awash in construction cranes. Obviously a bit of a reach to compare OKC with NYC or DC, but the point applies. Investment will occur where businesses think they can make the most amount of $$ over the LONG TERM.
And something to consider. The local economy was probably stronger relative to the rest of the country in 2010-12 than it is today, now that most of the country has recovered somewhat. So logic would state we would have experienced a flood of capital during that time; except that we really didn't. Only in the past 18-24 months has OKC really seen a lot of national players enter this market.
My point being, there are a lot of moving parts to OKC. It's important to note that the two largest economic "gets" this past year (expansion at Tinker and Boeing) had nothing to do with oil and gas. A swoon in prices of commodities which have always moved up and down have far less of an effect on massive years-long capital outlays than what is suggested here. So while yes some vigilance is always good, it is not something i would lose sleep over.
I agree with what you're saying. But we're in that $70/bbl range right now. We don't know where the bottom is yet, and we don't know how long we'll be bottomed out nor how quickly we'll get back to the $85/bbl range. Again, we don't need to worry about the viability of OKC in all of this. We don't even need to over-compensate for a perceived problem that isn't there. Again, this is a question of growth.
With this news in mind, hopefully city leaders are reminded that, economically speaking, OKC needs to really find a way to lure a major player or two in at least one other field that is unrelated to E&P and Publicly funded institutions. Tech and/or retail is probably wishful thinking, major medical/pharma or communications possible but difficult. OKC has some players in finance, but they're very localized/regionalized.
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I agree that the actual price is not the issue rather than the uncertainty of it all. My last point emphasized long term pricing; in the short term, however, there are few economic trends that would point to any sort of floor being established on oil prices. So I fully expect them to slide a bit more before it's all said and done.
This article helps show why affordable crude oil is so important to a healthy global economy.
Since reasonable crude oil substitutes are few and mostly not practical, at least for now, this is also a reminder of why we need policy’s that help keep supplies abundant enough to prevent the economic devastation caused by high crude prices.
Drill Baby Drill did work for crude oil prices just like it did for natural gas prices...
It will continue to work for many many decades to come, if allowed.
Keep in mind that our state is considered an exporter.
As oil prices plunge, wide-ranging effects for consumers and the global economy - The Washington Post
“As oil prices plunge, wide-ranging effects for consumers and the global economy”
An Oncue Express station in Oklahoma City was selling the motor fuel for $1.99 a gallon today, becoming the first one to drop below $2 in the U.S. since July 30, 2010
First U.S. Gas Station Drops Below $2 a Gallon - Bloomberg
It was with ethanol. The 7-11 across the street had it for 2.01. I had to drive by that station a couple times yesterday. pita! I went on down the street and paid 20 cents more without the hassle. I have noticed a lot more hummers and larger trucks than normal on the roads since the price drop. It seems like it is a good price for those driving gas guzzlers.
It's cheaper for me to buy 100% 91 octane than Ethanol 87.
I get 6 MPG better with 91 octane, which saves me the cost difference plus some extra by fueling with 91 100%.
26.2MPG x 15.9 gallon = 416.58 Mi range
20.6MPG x 15.9 gallon = 327.54 Mi Range
I get an extra 89.04 miles per fillup, divided by 26.2 MPG is equivalent to buying an extra 3.39 gallons of ethanol 87 gas.
Next time I fill-up I am going to try it. I only have a 12 gallon tank so even at 30 mpg it seems I am always stopping for gas.
I saw this post about better mpg with higher octane so I googled about it and some people seemed to think it was a myth. Has anyone done calculation on this?
I absolutely can tell a difference. Haven't done an actual calculation, but on the highway I easily get 5-10 mpg better.
but it's gotta be 100% 91 octane right, not a E-10 blended 91 octane to see the difference?
sweet, we just got a new (to us) car that recommends 91 so i'll take a look at this
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