Posted on 11/24/2015 5:12:30 AM PST by thackney
The prolonged slump in crude prices is rippling beyond the oil industry into areas of the North American economy...
...crude-market decline in its 17th month and nearly a year after OPEC dealt prices a sharp blow by refusing to rein in output, lower profits and mounting losses are crimping budgets, spurring multiple rounds of job cuts and driving some energy companies to seek bankruptcy protection.
Signs of that distress are spreading throughout once-booming oil-producing regions across North America. Sales of single-family homes in Houston fell 10% on the year in October, the first double-digit decline this year, according to the local association of real-estate agents. Restaurants in Texas and the Southwest have experienced a drop in revenue and customer traffic...
Chili's Grill & Bar operator Brinker International Inc. blamed low oil prices for weak results in some states that rely heavily on the energy industry.
"While we have been seeing pockets of softness within those regions for a while, the top-line challenges expanded during the quarter across Texas, Oklahoma, Arkansas, Louisiana," Chief Executive Wyman Roberts said on a conference call last month.
The gloom is deepest in and around pockets of the industry where costs are highest: shale oil, oil sands and the offshore Arctic. Tapping those fields made sense when oil was $100 a barrel, but less so below $50. From plunging car sales in Calgary, Alberta, to higher hotel-room vacancies in Williston, N.D., and weakening restaurant traffic in Texas, the ripple effects of the downturn are spreading....
"We actually are anticipating that some of the stressed companies are going to be looking to liquidate assets or that we will see some additional bankruptcies,"...
...Williston rents have fallen by half from their peak in 2013, according to a survey by a local apartment management association....
(Excerpt) Read more at wsj.com ...
The low fuel costs associated with the low oil prices are also a boom to a cripled economy.
IF ever there was something government should subsidize or provide help too, it would be the energy market. But alas, this goes against the ideology.
Low energy prices makes America more competitive globally
Low energy prices puts more money in the pockets of the economic engine of America
Low crude prices hurts our enemies economically
Some tax incentives or subsidies to the energy industry would could keep driving production and energy until America took more of the saturated market share.
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We don’t want government “help” for subsidies. That is always a loosing situation in the long run.
We need less government involvement in our energy production, not more.
In 98% of cases I agree completely. Precisely because government "help" comes with strings attached and is usually no help at all. Natural Resources is just a bit of a different animal when we examine the industry on a global level. The arugment against my proposition is the government's hand in American Agriculture. And I lose before I begin. But it is worth acknowledging why the best idea was the worst and not applicable to Natural Resources.
The GREAT IDEA that was helping the farmers to not lose money while keeping food prices down was a noble one when farming subsidies were first pondered. Over the years, the exact opposite has become the affect. And this is precisely becuase farming and food prices became dependent on subsidies. Before long, the government started paying farmers not to produce in an effort to control what naturally would nromally control itself, supply and demand.
Why is oil different? It's not much different. Except for the national security angle. If America can continue to take Global Energy Market share from the Middle East, Russia and China, it weakens them. China has invested a lot of money in petroleum exploration and production around the world. If American Companies can be shored up to encourage even more development and continue to under cut the global prices, competition could be bought.
The good thing about natural resource commodidities is it bounces back VERY quickly once the infrastructure is in place. Take away the subsidies and incentives and the price of oil jumps back up and the industry sustains itself, hopefully with American Companies in the driver seat. We have already pretty much broken OPEC.
It might still be a bad idea as corruption grows in our own country. But of all the entitlements and government spending to pick winners and losers, I see the energy market for fossil fuels specifically, as a market that can influence American interests globally.
' I know it goes against everything conservative. But it is a thought to ponder.
No.
Except for the national security angle.
The Strategic Petroleum Reserve is an appropriate use for government related to the oil industry. Subsidies to private industry is not.
I know it goes against everything conservative.
Correct. It is the wrong approach.
Glad I left Houston last year before this began.
I understand it is a losing argument. So how can we in America give our private companies/industry an advantage and encourage continued production of oil despite the supply and demand problem (low oil prices) that is making new exploration and production a losing economic proposition?
Normally I would say, let the market work. But we have our enemies on the ropes economically. Their economic engine isn't providing the revenue it once did.
“So how can we in America give our private companies/industry an advantage and encourage continued production of oil despite the supply and demand problem (low oil prices) that is making new exploration and production a losing economic proposition?”
a couple of thoughts:
1. I have seen estimates that up to 20-25% of the cost to produce oil is due to environmental causes. Although we must be good stewards, a lot of this is just ridiculous, like doing some required environmenal studies that does nothing but subsidize some university’s environmenal program. Getting rid of the fluff would be a large drop in costs to companies.
2. Opening up huge areas that are currently off-limits to companies. Do you know that the coast of California has huge fertile oil provinces? But companies are not allowed to drill for them or set new platforms. Example, Exxon drilled this well http://news.exxonmobil.com/press-release/exxonmobil-sets-drilling-records not because they wanted to, but because they were required to in order to reach oil that otherwise been developed using new platforms.
Many of these areas would compete very favorably, perhaps better, to existing fields in terms of value effectiveness at low prices
We need to domestically focus on the obstruction government makes in the oil and gas industry.
Adding more government involvement will only make the problems worse. Do not look for the government to select winners and losers in private industry.
Keep oil and gas on a level playing field with all other business and industry. Have them pay royalties, but quit with the special additional taxes and burdensome regulations.
We’ve been subsidizing energy prices for many decades.
We have paid billions and billions of dollars to protect supply lines of oil producers in the Gulf States (Arabia, not the US). They get their products to market without having to pay for the security necessary to do so. That security is paid for via taxes collected from United States taxpayers.
If the Gulf States had to pay the price to get their own products to market, the TRUE PRICE OF ENERGY would be borne by the consumer, WHERE THE PRICE BELONGS.
This sends incorrect information to the marketplace on the true price of energy. It subsidizes enemies of the United States through our own “Defense” spending and it undercuts US oil producers, since their prices are not subsidized by the US taxpayer.
Insofar as taxpayers who benefit from these subsidies, they are shafting their neighbors to get free stuff.
If we stop paying for the protection of ME Gulf States’ oil distribution routes and let the true cost of that be borne by the market, the true price of energy would be transparent to the consumer and prices would increase significantly.
We’re paying for it now, it’s just hidden in our tax bills. This means the price difference is going to Washington instead of domestic oil producers.
I see that as a security issue. Would not do to allow Russia or Iran to take over control of all that oil. Could be we need more security payments from those we protect, though.
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