Saudi Arabia to lower oil prices, the houston boom is over

And that $90B is only accounting for gas savings. It doesn't consider airfare savings or all the other products that get cheaper thanks to lower input and transportation costs.

 

This is from Dec 1, when oil was still around $70 / barrel:

http://blogs.wsj.com/economics/2014/12/01/lower-gas-prices-how-big-a-boost-for-the-economy/


Consumers: Consumers spent $370 billion on gasoline last year. With prices expected to fall around 20% from their average during the first half of the year, the drop in gas prices over the past six months amounts to a $75 billion tax cut for consumers, according to an analysis by Kris Dawsey, an economist at Goldman Sachs GS +0.53%.

Lower gas prices also benefit most businesses because it reduces shipping and production costs. Goldman estimates that the total boost from lower gas prices should boost growth domestic product by 0.4 percentage points over the coming year.

One open question is to what extent will households spend, rather than save, their unexpected windfall from lower gas prices. Goldman’s forecast assumes that around half of the windfall is spent over the coming year.

A drop in gas prices could be a particularly progressive tax cut because lower-income households are particularly sensitive to increases in energy prices. Households earning less than $50,000 annually spent around 21% of their after-tax income on energy in 2012, up from 12% in 2001, according to analysts at Bank of America Merrill Lynch. Households earning more than $50,000 spent 9% of their after-tax income on energy, up from 5% in 2001.


This estimates $75B savings based on just that drop in prices - we've dropped much farther since then. My $90B estimate was just that $750 x the # of households in US, but that seems to have been an underestimation.

 

BHP had way too many onshore rigs for a while now.

 

Just got laid off due to this ongoing situation

 

No worries, your former executives are getting hefty raises for their bold, cost cutting, company saving moves.

Seriously though, I'm very sorry to hear. I've been in that situation myself twice when I worked in the industry. I've since left the industry and haven't looked back.

 

I'm thinking of making that move myself. Already lined up several interviews for non-oil industries

 

Stay positive and good luck.

 

If you don't mind saying what company was it? or what kind of company? Upstream, midstream, oil services, etc?

 

Sorry to hear that, man.

Layoffs seem pretty short-sighted since so many are saying these prices aren't going to last for very long. Any excuse to cut costs, I suppose.

 

Sorry to hear that. Stay positive. Things will always get better.

This is why I couldn't help but smh at some of the posts in this thread. Freakin happy over peanuts.

 

Some folks need those peanuts. Those peanuts mean some extra clothes, maybe keeping the heater on longer. There are two sides to every coin. I feel for your side but look at the other.

 

Sorry to hear that. What do you do?

 

haha wow. so someone that is pooor and commutes to work every day in traffic and saves $100 or more a month in gas cant be happy about that? that same person could also feel bad about someone losing a 100K+ a year job, but still be relieved that they have a little extra money in their pocket after living check to check with 2 crappy jobs.

sheeesh

 

I don't believe the "Global demand has decreased" argument...

In August, crude oil was selling at $98 a barrel. Now, only six months later, it's selling for only $47 a barrel. Are you trying to tell me that the global demand for oil changed so dramatically and so quickly that the priced dropped 50% in only six months? I find that very hard to believe. Yes, I can believe that alternative energy and conservation efforts *might* be gradually decreasing demand but certainly not over a six-month period.

(NOTE: And, yes, I could see how it would be possible if, over a six month period, a vast majority of the oil-dependent systems in the world switched to alternative fuels. But, although we're seeing some shifts to alternative energies... as I indicated, they're gradual shifts that are taking years to develop, while the oil price has dropped within that past 8 months)

 

It's a confluence of events...

Demand is down

Production is continuing to rise

The world economy is not doing stellar

The dollar is strong

http://bbs.clutchfans.net/showpost.php?p=9456450&postcount=349


It's looking more and more to me like $100+ oil was an outlier event. It's going to be a long time before we see $100 oil again imo. Maybe I'll be eating my words, but there are too many factors working against oil now.

Spoiler

 

I'll be joining you in March, brother.

Just heard from one of our execs that we're anticipating $50 oil through 2016, having to wait until 2020 to get back up to $70.

 

This'll be my only comment about this because it sucks that people are losing their jobs. It's hard to live in Houston and not know someone who is worried about their future. But to either look down on or just show a complete lack of understanding of the people who are happy that they are finally seeing some relief in their bank accounts is not the best way to garner sympathy, IMO.

We're saving $200+ a month on gas between our two cars, and we're lucky enough to be able to car pool 95% of the time. Gas is a required-expense for so many, especially in a city with mass transit system like ours that does not make commuting from the suburbs very feasible if you don't work in certain parts of the city. What's peanuts to some is real money to millions of others, especially when you have a kid and one on the way. I hear this all over the place in social media. There's a picture making the rounds showing a picture of 3.79 (or something like that) gas with the caption "all of us can afford this" contrasted with the picture of cheap gas prices that says "not all of us can afford this". That picture is just flat-out false and insulting.

Luckily, I fall into the camp where these lower gas prices are helping us finally finishing off our debt and making other trips/purchases that would not have been possible. The question is why does an O&G employee deserve my extra money, but not an employee in the hotel industry?

 

I read that SUV sales are skyrocketing and hybrid sales are crashing. You gotta love how based on a month and a half of cheap oil people are making 5-6 year commitments on a new vehicle.

 

Like most Americans, they'll just pile on more debt and trade it in if oil goes back up.

 

I mentioned that it depends on the # of cars in the household as far as savings are concerned. Saving $200 a month is nice for a 2 car household. $2400 a year sounds even better assuming this lasts for a span of 12 months.

BUT that doesn't equate to losing your wages minus unemployment benefits (6 to 12 months). A lot of people will find work once the price recovers, but some may never. I've seen reeko say that I'm in chemicals, this is a good thing, etc doesn't help people feel better that are being affected either. I've seen contractors let go already. What about the inevitable foreclosures that will occur in Houston?

In that context, don't you think a couple hundred bucks a month is peanuts? Esp when you know that this **** isn't gonna last that long. Perhaps, it does last for 2-3 years or longer. Some are wishing it does and some are wishing that it doesn't. People lives can and are being ruined in the short-term though. We do know that.