Oil prices

[venture]

Oil needs to be roughly in the $75-$100 range. If it stays there it's expensive enough producers can make a profit but cheap enough that it doesn't break the back of the consumer. Hopefully it heads back up there going into the next year. Today saw quite a jump, but it could just be a bounce due to how far it fell on Friday. We definitely don't want to see it go north of $110 just like we really don't want it below $60.

If you think $75-100 is cheap enough to not break the back of the consumer you are delusional to what is going on across the rest of the country. The only parts of the country that don't want to see it drop anymore are those that haven't diversified their economies enough to handle a drop in energy prices. Just like the areas that rely on manufacturing didn't plan for high energy prices and the impact it will make. Oil needs to get down to around $50 to let the rest of the country catch up.

We will be fine. The whole point of increase production was suppose to be energy independence and lower fuel costs...wasn't it? Funny how once it drops, all the oil guys are crying. I want to avoid politicizing this too much, but google Speaker Boehner's comments about when gas hit $3.96 in 2008. The push was to increase produce to get gas prices back to $1.63. Production has increase but prices remained high until just recently. So what story is the oil industry going to go with now? A lot of interesting double talk now when prices start falling. They people that pledged it apparently never wanted it.

[hoya]

If you think $75-100 is cheap enough to not break the back of the consumer you are delusional to what is going on across the rest of the country. The only parts of the country that don't want to see it drop anymore are those that haven't diversified their economies enough to handle a drop in energy prices. Just like the areas that rely on manufacturing didn't plan for high energy prices and the impact it will make. Oil needs to get down to around $50 to let the rest of the country catch up.

We will be fine. The whole point of increase production was suppose to be energy independence and lower fuel costs...wasn't it? Funny how once it drops, all the oil guys are crying. I want to avoid politicizing this too much, but google Speaker Boehner's comments about when gas hit $3.96 in 2008. The push was to increase produce to get gas prices back to $1.63. Production has increase but prices remained high until just recently. So what story is the oil industry going to go with now? A lot of interesting double talk now when prices start falling. They people that pledged it apparently never wanted it.

You know what? I don't want the rest of the country to catch up. We dealt with decades when gas was $1.00 a gallon and the rest of the country had booming growth. We need time to catch up. We aren't diversified enough. High energy prices result directly in job growth and prosperity in Oklahoma.

[venture]

You know what? I don't want the rest of the country to catch up. We dealt with decades when gas was $1.00 a gallon and the rest of the country had booming growth. We need time to catch up. We aren't diversified enough. High energy prices result directly in job growth and prosperity in Oklahoma.

I completely get where you are coming from and don't really disagree with the general principle behind it. How much time does it take for us to catch up? How can we possibly diversify when you have a tax structure that is so slanted towards O&G with incentives that other industries aren't likely to get the same treatment? We all want diversification, but then we throw billions at O&G in tax breaks that we remain dependent on them.

There will be a time when oil crashes...is this it? I'm not sure. If anything this should be a warning shot to wake us up to make sure we are doing more. I am excited for the opportunities that OKC has had from this boom, but I hate seeing a large portion of the country brought down because of it. There has to be a happy balance and perhaps with this adjustment in prices we are finally going to get there.

[s00nr1]

I completely get where you are coming from and don't really disagree with the general principle behind it. How much time does it take for us to catch up? How can we possibly diversify when you have a tax structure that is so slanted towards O&G with incentives that other industries aren't likely to get the same treatment? We all want diversification, but then we throw billions at O&G in tax breaks that we remain dependent on them.

I must respectfully object to this argument. You have to take into consideration the tax incentives are in place as a result of a commodity that is plentiful in this state, just as subsidies are in place for farming, as well as the generous aerospace engineer tax credits that have subsequently led to an influx of aerospace employment in OKC. The "tax structure" has little to do with market diversification (as can be seen in Texas where O&G receives a similar subsidy as OK, yet economic expansion is quite diverse). The main route to economic diversification is strengthening the education base and quality of life, both of which have been positively impacted by the state's oil and gas production over the past decade. The business climate as a whole in Oklahoma is more friendly than the majority of states in the U.S.

There will be a time when oil crashes...is this it? I'm not sure. If anything this should be a warning shot to wake us up to make sure we are doing more. I am excited for the opportunities that OKC has had from this boom, but I hate seeing a large portion of the country brought down because of it. There has to be a happy balance and perhaps with this adjustment in prices we are finally going to get there.

If, by "large portion of the country," you are referring to the airline industry, then yes. However, as can be seen in the data in my earlier post, economic consumption/output has overall taken the increase in input costs in stride (mainly via improvements in productivity/efficiency). What goes for the airline industry does not go for all.

[s00nr1]

If you think $75-100 is cheap enough to not break the back of the consumer you are delusional to what is going on across the rest of the country. The only parts of the country that don't want to see it drop anymore are those that haven't diversified their economies enough to handle a drop in energy prices. Just like the areas that rely on manufacturing didn't plan for high energy prices and the impact it will make. Oil needs to get down to around $50 to let the rest of the country catch up.

We will be fine. The whole point of increase production was suppose to be energy independence and lower fuel costs...wasn't it? Funny how once it drops, all the oil guys are crying. I want to avoid politicizing this too much, but google Speaker Boehner's comments about when gas hit $3.96 in 2008. The push was to increase produce to get gas prices back to $1.63. Production has increase but prices remained high until just recently. So what story is the oil industry going to go with now? A lot of interesting double talk now when prices start falling. They people that pledged it apparently never wanted it.

Some food for thought re: falling oil/gas prices corresponding to increased consumption and economic returns:

"Personal Consumption Expenditure (PCE) number that comprises roughly 2/3rds of the economic GDP calculation. Therefore, we can also analyze falling gasoline prices as it relates to total PCE. Again, falling gas prices should lead to increases in PCE."

"While the argument that declines in energy and gasoline prices should lead to stronger consumption sounds logical, the data suggests that this is not actually the case. With consumers heavily leveraged already, any increases in disposable incomes from lower gasoline prices are likely negligible in terms of their monthly spending.

Historically, when the 24-month rate of change in oil prices has exceeded 100%, it has been a precursor to economic weakness."