Sorry, but I wouldn't have been able to hold back!
How's that sayin' go?
"Don't let the door hit you on the @ss!"
Posted on 09/01/2015 5:42:24 AM PDT by thackney
In November 2014, the leaders of Saudi Arabia made one of the biggest bets in history. Their strategy was flawed, and they’ve already lost.
In an OPEC meeting that month, Saudi Arabia announced it would maintain high oil-production levels despite falling prices. The Saudis were betting that by keeping prices low they could protect their market share and kill America’s energy renaissance—a rebirth driven largely by Texas, which produces 37% of America’s oil and 28% of its marketed natural gas.
The Saudi strategy seemed to make sense. The conventional wisdom was that energy producers working in “tight” shale formations would be squeezed by low prices, since their extraction methods—hydraulic fracturing and horizontal drilling—are more expensive than conventional drilling. So, surely, once that happened Texas would be in serious trouble.
Columnists at the New York Times and elsewhere said the “Texas miracle” was fading, or even dead . . . and some of them seemed happy about it.
But an interesting thing happened on the way to the collapse of the Texas economy—it didn’t collapse.
First, many people still don’t seem to realize how diversified the state economy has become. In 1981 oil and gas production and its support services accounted for nearly 20% of Texas’ gross state product. Today, after years of incredible growth in the industry, it contributes less than 14%.
Dallas and Austin are booming today, but not because of oil and gas. Even in the 1990s when oil spent much of the decade at less than $30 a barrel, the state economy grew steadily.
And despite the slump in energy prices, oil and gas production in Texas and the U.S. has continued to rise. In fiscal 2015 oil prices were lower than my office had predicted, but revenues from Texas’ oil-production tax came in higher than expected...
(Excerpt) Read more at wsj.com ...
Texas oil production has been falling for a few months down from the peak in March.
Texas Field Production of Crude Oil
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPTX2&f=M
The oil industry in Texas is well acquainted with the boom-and-bust nature of the business. If those working in the Eagle Ford and Permian didn’t save their cash during the boom, they were not very smart. But Texas oil will rise again. It always does.
AND ... there are other parts of the country still experiencing SOME boom
:: Columnists at the New York Times and elsewhere said the “Texas miracle” was fading, or even dead ::
What the media doesn’t understand is that the O&G producers aren’t tied to the modern cultural idea of “instant gratification”.
A well comes in and BOTH the producer and landowner have on-going financial (AKA: capitalism) rewards. The media seems to think that if the industry isn’t bringing-in “new, huge” production fields, they are in financial/production decline.
There are wells in SouthCentral Michigan that were opened in 1958 (Albion-Scipio Field) that are still financially viable today, yet are on the decline regarding production.
The media seems to have this “Drake Gusher” mentality when the industry has a “Texas Brisket” mentality...low and slow cooked.
Thanks Thackney.
ping
It wasn’t just the Oil Patch ‘hands’ that were unlikely to save a dime of the Boom big money. They never do. It was also a large number of small business service providers and mid-sized producers that lived real high on the proverbial hog during the money tsunami.
“The media seems to have this “Drake Gusher” mentality when the industry has a “Texas Brisket” mentality...low and slow cooked.”
love that analogy
Second that.
The best thing about this downturn is all the Yankees that came here to suck the Texas teat (while spewing their liberal krap everywhere and complaining about how we run things...)have moved out!
Yeah, but they’re coming to central Texas... :(
Oh no! I am so sorry.
It's weird how you can tell “them” from “us” isn't it?
Especially their women at the grocery store all dressed up for a play in New York; walking around like shopping is beneath them.
One of them, while walking out of the store behind me was talking with her companion about “wanting out of this backward hellhole”. I so wanted to tell her off, but I just kept walking (you probably know what I was thinking, though)
Trying to play games with a nation of innovative people is risky.
By "some," did the author of this article mean "ALL?"
Sorry, but I wouldn't have been able to hold back!
How's that sayin' go?
"Don't let the door hit you on the @ss!"
Not everyone agrees this was their goal.
I see them facing reality. At $100 per barrel, current technology conditions meant significant growing production from other sources, including other energy sources. There wasn’t any real expectation for their income to continue unchanged.
If they reduce production to keep prices ~$100, they would have to continue making those cuts while other gained.
It has been a rough ride down for most that ride this rollercoaster. But the expectation it wouldn’t change was naive. Only a matter of when and how far. Both the speed and the depth of the drop surprised me.
“Don't let the door hit you on the @ss!”
____________
Love the graphic!
If you had posted what I posted, I would have the same reply to you. But I will tell you why I bit my tongue remaining silent - as well as you would have.
The Yankee women always spoke loudly to ensure others could hear their disdain; they walk around with their noses up. They do this to make themselves feel better because Texas is providing their livelihoods. They need us to see, hear and be properly cowed by their awesomeness.
They think it shows us Texas Gals their “higher class”. But, while they are busy thinking they have class, Texas Gals DO have class. And neither you or I would give them the satisfaction they were seeking.
In an OPEC meeting that month, Saudi Arabia announced it would maintain high oil-production levels despite falling prices. The Saudis were betting that by keeping prices low they could protect their market share and kill America’s energy renaissance—a rebirth driven largely by Texas, which produces 37% of America’s oil and 28% of its marketed natural gas.
...
Personally, I think that was a actually a coordinated attack on Russia’s main revenue stream.
Both the speed and the depth of the drop surprised me
__________________
That is how a downturn happens - every time. One day you’re rolling in clover, the next you are not.
Even though the oil companies were raking it in - so were those employed directly or indirectly, by the industry. The smart ones opened savings accounts and didn’t blow the largess.
Bingo Moonman62!
Same thing as 1980.
Or an attempt to force Russia to work with OPEC before any cuts are made to raise prices?
Russia, Venezuela to Discuss Potential Steps to Stabilize Oil Prices
http://www.wsj.com/articles/russia-venezuela-to-discuss-potential-steps-to-stabilize-oil-prices-1441040230
Aug. 31, 2015
Russian President Vladimir Putin will discuss “possible mutual steps” to stabilize the global price for oil at a meeting with Venezuelan President Nicolás Maduro in China on Thursday, a Kremlin aide said, as both countries grapple with lower prices for their main export.
Venezuela, a Russian ally that has been hit hard by plunging oil prices, has been pushing for an emergency meeting with the Organization of the Petroleum Exporting Countries in coordination with Russia to work out a strategy to halt the recent retreat in prices, people familiar with the matter said.
The Kremlin aide, Yuri Ushakov, didn’t expand on what potential steps could be taken but said they could be “within the context of Russia’s cooperation with OPEC.”
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