Oil prices

[s00nr1]

What a horrible thing to say and probably furthest from the truth. However, what I would like to know is...what happened to all the "Drill Baby Drill" people that said expanded drilling would bring oil and gas prices down for consumers? Well prices are falling now...isn't that what was being championed before? So what exactly was the motivation to demanding more drilling?

It is quite apparent that it wasn't for the benefit of consumers and no industry official ever honestly wanted prices to fall.

I personally don't want a crash, but things need to fall a bit more so we aren't stuck in this economic slump. Who knows, this could be a very good thing for Oklahoma when it comes to diversification. It can allow for others industries to start growing because their costs will go down. Nothing wrong with that at all.

A couple of things here....Venture, you are probably my favorite contributor on OKCT, and being that I work in the weather business, I have an affinity for what you provide here and on Weather Spotlight. I will, however, say your continued vitriol of the energy industry is a bit frustrating.

With that being said, economically-speaking, we have already seen what could certainly be considered a "crash" across the industry. A collapse in the value of an underlying asset of nearly 50% in 6 months (WTI) certainly qualifies as such. Not to mention the complete destruction of market valuations of E&P's (see CLR's market cap being reduced some 60% since its high earlier this year and SD's by 75%). This type of decline will have far-reaching impacts, especially in the debt markets, where many producers have leveraged themselves to high-yield bonds they will no longer be able to meet payment obligations on.





Eventually, this will permeate its way through the economy, as the $15 per tank we all save on gasoline will not be able to make up for the pain felt in the energy and financial sectors as a result. To be rooting for a continued decline in WTI would be akin to rooting for trouble for OKC (and Oklahoma as a whole) and I, for one, am content with paying $2.75/gallon for gasoline if it means I don't have to worry about the local economy and the jobs of many in my area.

[venture]

A couple of things here....Venture, you are probably my favorite contributor on OKCT, and being that I work in the weather business, I have an affinity for what you provide here and on Weather Spotlight. I will, however, say your continued vitriol of the energy industry is a bit frustrating.

With that being said, economically-speaking, we have already seen what could certainly be considered a "crash" across the industry. A collapse in the value of an underlying asset of nearly 50% in 6 months (WTI) certainly qualifies as such. Not to mention the complete destruction of market valuations of E&P's (see CLR's market cap being reduced some 60% since its high earlier this year and SD's by 75%). This type of decline will have far-reaching impacts, especially in the debt markets, where many producers have leveraged themselves to high-yield bonds they will no longer be able to meet payment obligations on.

Eventually, this will permeate its way through the economy, as the $15 per tank we all save on gasoline will not be able to make up for the pain felt in the energy and financial sectors as a result. To be rooting for a continued decline in WTI would be akin to rooting for trouble for OKC (and Oklahoma as a whole) and I, for one, am content with paying $2.75/gallon for gasoline if it means I don't have to worry about the local economy and the jobs of many in my area.

I really don't mean to be frustrating at all. I also don't have any issue with an industry making as much money as possible. The theme in posts has been the beef with the energy industry is the line we were sold about more drilling, opening up more public lands would bring prices down for consumers. Now we are seeing lower prices and the industry is spouting doomsday. They are upset with events unfolding that are almost what they were trying to sell us on with in the last 10 years. That's where my beef is.

Also keep in mind, the savings may not seem that great here...but look at other areas that were pushing $4+ a gallon or the heavy manufacturing sectors. They will see a nice windfall from this.

I don't only pick on the oil and gas industry though. I've been very critical about the BS consolidation in the airline industry that has wiped out consumer choice and competition. We've seen the DOJ approve merger after merger saying that a bigger stronger airline will help compete against the other bigger airlines only to lead to each airline getting cozy and not really doing anything. Dozens of smaller cities have completely lost service as airlines contract. Southwest dumped around 20 cities from the AirTran network that were profitable with the AirTran model, but not Southwest.

I guess you can say my beef is with powerful entities that preach they are going to do one thing and then completely do a 180 when the time arrives to act.

[Just the facts]

Yet more proof that Oklahoma is far too reliant on one industry.

[bradh]

Yet more proof that Oklahoma is far too reliant on one industry.

No one is arguing that and most agree, diversification of the economy is good. When those impact studies are done it's not a "rah rah we're the end all be all, OK doesn't need anything else."

[Just the facts]

Yet more proof that Oklahoma is far too reliant on one industry.

No one is arguing that and most agree, diversification of the economy is good. When those impact studies are done it's not a "rah rah we're the end all be all, OK doesn't need anything else."

Actually, yes they are doing exactly that. The oil industry uses this type of study to lobby for more tax breaks and less regulation by claiming they are the only game in town.

Rally for the Rigs - News - OIPA

RALLY FOR THE RIGS
10 a.m. - 2 p.m.
April 9, 2014
Oklahoma State Capitol


Founded in 1955, the Oklahoma Independent Petroleum Association was created to give the state’s independent oil and natural gas producers a unified voice. It’s time our voice is heard.

The oil and natural gas industry is the driving force behind Oklahoma’s economy, and the decisions made by our state legislators impact each and every one of us. Your presence on April 9 will show Oklahoma lawmakers the people who are affected by legislation focused on the oil and natural gas industry.

OIPA will do everything in its power to protect and promote our industry, save jobs, and preserve our nation’s energy security, but associations are only as strong and successful as the membership is active. We desperately need your help.

Today, the OIPA is made up of more than 2,700 members from Oklahoma’s oil and natural gas industry, and we encourage each and every one of you to join us at the Oklahoma Capitol for our “Rally for the Rigs.” Bring your co-workers. Bring your employees. Bring your family. Let our lawmakers know the strength of Oklahoma relies on the strength of the oilfield.

[Snowman]

Yet more proof that Oklahoma is far too reliant on one industry.

I remember one of Mick's quotes he gave in several interviews/chamber clips as roughly: we have been working to diversify OKC's economy since the 80 bust, we have been succeeding in doing so, but as much growth as it has it is tough to keep pace with. I am sure it is even harder for smaller cities.

[bradh]

Kerry what do you want them to say, that they're not the leading industry in the state? Give me a break if you don't think all industries fight for themselves.

[Just the facts]

Kerry what do you want them to say, that they're not the leading industry in the state? Give me a break if you don't think all industries fight for themselves.

I do expect them to do that (I'm not the one arguing they don't). Mineral extraction is the closest thing anyone could ever come to literally finding money on the ground. We should have taxed the **** out of it from day one and oil companies should have paid every man, woman, in child in Oklahoma $1,000 month for the opportunity to come in and get it. That tax money should have then been used to attract non-oil related industries. Dubai had the right idea (but very poor planning and execution) when they poured trillions of dollars into other industries knowing full well that one day the oil gravy train will be over. Meanwhile back at the farm, Oklahoma continues to do the exact opposite by refusing to even tax mineral extraction at the same rate as buying a gallon of milk.

[Stickman]

AGREE, the Governor has taken credit for all the upswing. Lets see if she takes credit for the down-turn.

[Filthy]

I've just been reading this thread over the past few weeks, with nothing more than an outside interest in all things Oklahoma/Economy/Oil. I'm in the technology field, so I cant claim to know anything about the oil business itself. However, one of my best friends is pretty heavily entrenched at one of the "Big 3" here in OKC. Throughout this whole price "slide" process, I have been checking his temperature on the subject. From the get go..his overall response has been that it is troubling...but nothing to lose sleep over. Over the past few weeks however.....his tone has increasingly changed ever so slightly to the negative. Last week, he told me, that there is going to be some "pain" coming. I'm not sure what that term means to him.....but that's what it was. And then just this morning, he texts me out of the blue...and the text is simply.... "Oil: the pain is coming, and its about to get bad...real bad."

That's REAL out of character for him.

[Just the facts]

I think people are underestimating the impact that could occur here. When the support for anything goes away it only makes sense that a certain amount of collapse will occur. The magnitude of the collapse in exponentially proportional to the amount of support that gives way.

[bchris02]

This is really starting to concern me. Prices are now below $60 and still falling. The question is, how much lower is it going to go and how bad will the economic impact be in OKC? I don't think anybody knows the answer. Now is a time locally that is similar to what we saw nationally in late 2007-early 2008 with the banks. Everybody knew a collapse was about to happen but nobody knew what it would look like or whether it would be mild or severe. It ended up being more on the severe side yet it wasn't near as bad as it could have been. OKC seemed to weather that recession and the resulting fall in oil prices to $30/bbl pretty easily. Unemployment here never came close to the levels much of the rest of the country saw.

While this could mean the end of the boom for the local economy, it's good news for the national economy at large. It's just unfortunate that it's coming now, just as some serious ground was starting to be covered in OKC development. OKC has been dealt some bad hands throughout its history and needs the boom to continue to catch up with the rest of the US.

[sooner88]

This is really starting to concern me. Prices are now below $60 and still falling. The question is, how much lower is it going to go and how bad will the economic impact be in OKC? I don't think anybody knows the answer. Now is a time locally that is similar to what we saw nationally in late 2007-early 2008 with the banks. Everybody knew a collapse was about to happen but nobody knew what it would look like or whether it would be mild or severe. It ended up being more on the severe side yet it wasn't near as bad as it could have been. OKC seemed to weather that recession and the resulting fall in oil prices to $30/bbl pretty easily. Unemployment here never came close to the levels much of the rest of the country saw.

While this could mean the end of the boom for the local economy, it's good news for the national economy at large. It's just unfortunate that it's coming now, just as some serious ground was starting to be covered in OKC development. OKC has been dealt some bad hands throughout its history and needs the boom to continue to catch up with the rest of the US.

Is it time to press the panic button?

[bchris02]

Is it time to press the panic button?

You can mock all you want but thinks could potentially be getting very bad in this town within the next year. I hope it doesn't but if oil prices keep falling and don't recover by spring the bottom could fall out of the local economy.

[adaniel]

You can mock all you want but thinks could potentially be getting very bad in this town within the next year. I hope it doesn't but if oil prices keep falling and don't recover by spring the bottom could fall out of the local economy.

What are you or anyone else going to do about it besides post breathless declarations that the sky is falling?

Sometimes its best to BREATHE and let these things play themselves out. The people trying to predict this stuff are usually more wrong than they are right.

[Plutonic Panda]

Is it time to press the panic button?

I don't know.

[Richard at Remax]

Yes

[Just the facts]

Even in a total oil collapse you won't see anything compared in the 1980's. As was said earlier, that was a bigger banking collapse than anything else.

[bchris02]

Even in a total oil collapse you won't see anything compared in the 1980's. As was said earlier, that was a bigger banking collapse than anything else.

That is one good thing. As long as the oil collapse doesn't trigger a financial crisis, then OKC should be spared the worst. The 1980s saw an oil glut at the same time as a nationwide financial crisis that at the time was the worst since the Great Depression.

[sooner88]

Continental cashed out on their hedges, but that is an anomaly. The reality is a majority of companies have a portion (obviously varied) of their production hedged through at least 2015. If oil stays at sub $60 for a long period of time, for sure we will see an impact on our local economy.... but we have a long way to go before we see that. Saying that we will see "the bottom fall out of our local economy by spring" is asinine.

[Filthy]

Mid to high $40 range by February/March. ZING!

[adaniel]

If you would like to see how OKC will fare, watch the economy in Houston. They are more exposed to oil than OKC (OK in general is more of a gas state), and will feel any effect from falling prices a few months before OKC will. They are definitely experiencing a slowdown, although nothing to freak out about, at least not yet:

Oil Price Crash Will Cause a 10 to 12 Percent Drop in Home Sales in 2015, Houston Association of Realtors Says | Realty News Report

Houston-Area Sales Show Worst One-Month Drop Since 2009 - 12-10-2014 : Houston Public Media news ... Houston Public Media

[jn1780]

If you would like to see how OKC will fare, watch the economy in Houston. They are more exposed to oil than OKC (OK in general is more of a gas state), and will feel any effect from falling prices a few months before OKC will. They are definitely experiencing a slowdown, although nothing to freak out about, at least not yet:

Oil Price Crash Will Cause a 10 to 12 Percent Drop in Home Sales in 2015, Houston Association of Realtors Says | Realty News Report

Houston-Area Sales Show Worst One-Month Drop Since 2009 - 12-10-2014 : Houston Public Media news ... Houston Public Media

I wouldn't complain since I'm planning on buying a house this spring. I have a feeling the falling prices would come after I buy though.

[TheTravellers]

I wouldn't complain since I'm planning on buying a house this spring. I have a feeling the falling prices would come after I buy though.

Ha, I'm in the same boat as you, probably the day after we close, we'll find out we could've saved thousands....

Seriously, though, there's almost nothing any of us average folks can do about this, except maybe save a bunch of money just in case. Sh*t just happens sometimes that you have to get through - for me they were a layoff in IL, a layoff in WA, the recession, and there wasn't a damn thing I could do about any of it, I just had to deal with it...

[ctchandler]

Ha, I'm in the same boat as you, probably the day after we close, we'll find out we could've saved thousands....

TheTravellers,
It might be true that you "could've saved thousands", and, it might not be true, regardless, you will probably have at least five friends tell you how much you could have saved if you hadn't rushed into it!
C. T.