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

48 million Americans currently live in poverty - that's about $24k for a family of four. Many of these people are getting a lifeline that is most definitely NOT "peanuts". It gives these people a significant boost in real-income that can be the difference between paying rent or eating a healthy meal or declaring bankruptcy (which 4 million people do each year). Not to be rude, but your posts make it sound like you have no understanding of people's lives outside of your own circle.

 

Two former co-workers hit me up this week and last. Both laid off. I work in the natural gas division of a large E&P and I think I'll be joining them in March.

 

I have to agree with this. Everything you've said, sammy, revolves around people in the O&G field and how gaining $200 a month in gas does not make up for them losing their O&G jobs. No one is saying that. For those people it will indeed suck. And being in Houston we're either affected ourselves or know someone who is/will be. But we're talking about the broader economy, especially the people who make >$30k and live paycheck to paycheck, and how this will definitely affect those people positively.

 

US Steel layoffs another 545; though the fault here is said to be 'low cost imports' and restructuring:

Another steel company (Tenaris Hickman) announced about 300 layoffs:

Caterpillar layoffs 200, though I wonder if this is more an affect of lower steel and copper prices than oil and gas:

 

My parents own daycares in the city. They deal with lower income families so I have a better understanding than most. In fact, I ran a couple of locations after college so I have first-hand experience actually. Daycare paid for, groceries paid for and so on and so on. We don't live in a third world country. I've been to Cameroon in the past year twice. I've been to India and Mexico. That's real poverty, but that's besides the point.

I'm not even sure how we got to this point in the discussion. Of course, lower income families will benefit the most from the savings. Didn't I say that in the first place?

 

So if we get that keystone pipeline built, will that also help reduce the cost of oil?

 

If I was in O&G I would look at my salary or pay (Landmen) in 5-to-10 year installments and use some sort of historical benchmark for the industry, company and my position to plan financially.

I wouldn't assume that I held the same job the full 5-year increment. The data might say I'll make $100,000/year during that time but I'd be spending 1 of those years making just $30,000 while I looked for work and/or worked a temporary job. So I wouldn't be making $100,000/year, it'd be $86,000/year and I would budget accordingly. Any bonus, raise or unexpected time spent employed would just be a cherry on top.

O&G has always been so volatile that I'm surprised people are genuinely surprised when the good times grind to a halt. It'll happen again and again. That's part of what you're signing up for. I cant say that I'm not sympathetic for O&G workers, I am, I'm just surprised the mentality some have. You didn't see this coming? It's always coming...

I wouldn't say ditch O&G if the pay is right (it usually is), just plan for it. You're not making as much money as you think you are long-term but hey, you might get lucky and chances are you're probably still making good money compared to most folks.

 

^Good post.

 

Well if you live in houston where it so highly dependent on O&G pretty much every industry is in risk except healthcare.

 

Yeah, it's all at risk. Housing prices, commercial developments, retail, growth in general - all of it. IT and marketing companies are going to take a hit too as their clients start cutting them lose. The boutique firms like Entrance catering almost elusively to O&G? Forget layoffs, those companies might not even exist next year.

But if you're in it directly and servicing O&G you better understand what you're getting into and prepare for the inevitable cycle. I don't think it's so bad, generally you get top notch benefits, good pay and a severance when the bad times do come.

 

BP's Bob Dudley: Oil prices 'low for up to 3 years'

Spoiler

Mr Dudley said historically world oil prices have fluctuated, and sometimes have remained low for a number of years.

He expects to see current low prices for at least a year, and that BP has to plan for that.

"Companies like us, at BP, we're going to need to rebase the company based on no guarantees at all that the price will come back up," he said.

"We have go to plan on this [price] being down, and we don't know exactly what level, but certainly a year, I think probably two and maybe three years."

From 2010 until mid-2014, oil prices around the world were fairly stable, at around $110 a barrel.

However, since June prices have more than halved. Brent crude oil is around $48 a barrel, and US crude is around $47 a barrel.

Full story: http://www.bbc.com/news/business-30913321

 

I think we are one strike away from the Houston death knell:

1) Increased US production - leads to drastic price drop
2) increasing Iraqi production - leads to years of low prices
3) Fed increases interest rates - pulls the proverbial rug out from under the Houston economy

 

conversely it would only take a war in Northern Africa, the middle east or a Russian area to cause oil prices to increase.

 

Can somebody hire George W. Bush for President please?

 

Here, I'll make you a big bowl of "Dude, just SHUT UP! Quit reminding people" Popcorn!

 

As long as houston bases it's economy on an old technology with severe geopolitical issues..

 

With all due respect.... no it isn't peanuts. There are many Americans living on a very tight budget.... $200 a month makes an enormous difference in their life. Hell that is groceries for the month.

 

No.... Houston has a very diverse and strong economy. You want to see a vulnerable area economically, go check out the Midwest.... THAT is a dying economy.

 

I still see too many people blanketing the "O&G" industry under one umbrella. Again, organizations with an emphasis on exploration and upstream operations, as well as their service providers and vendors, that's who are going to feel the biggest crunch. Companies with robust mid and downstream operations should see increased margins on that end which should help alleviate some of the strain suffered by their upstream operations.

So yeah, steel/pipe companies, equipment manufacturers, maybe even the railroads (to a lesser extent) and their customers, that's who's going to feel it. The cause of the price drop has nothing to do with consumer demand, so downstream operations should be fine. Exxon, Chevron, Citgo, Total, Shell, etc... Will probably come of this shining, and with a new portfolio of shale plays to exploit once prices go back up.

Houston's economy will be fine.

 

its all relative.. but it doesnt take away the fact that oil is very replaceable in the no to distant future.