Tuesday, April 07, 2015

Thanks to hydro fracking, the Texas oil industry turned out unprecedented volumes since 2010. Billions of dollars have been made, thousands of jobs were created and small town economies from Maverick to Leon counties have prospered over the past five years. Enter the spring of 2015 and these trends have collectively made 180 degree turn.

The 21st century Texas oil boom is currently taking a steep nosedive. A reflection of what you’ve been paying at the pumps since Thanksgiving, oil prices have plummeted 60% since the end of November. From over $100 per barrel in September all the way down to right around $46 per barrel throughout the past 6 months the operating and profit loss to oil companies across the globe have obviously taken a substantial hit.

This reversal in fortune is not only impacting oil workers and the oil companies. Every industry from contracting partners such as machinists and developers to retail and grocery are carrying the weight of a struggling economy. With this, the general business activity index declined from -11.2 to -17.4 in March, vs expectations for a rise to -9.0. The February report also missed expectations, coming in at -11.2 from the previous reading of -4.4.

This bust can be credited to everything from to the volatility in the Middle East to the discrepancy in supply and demand. Conditions are even projected to get worse before they get better, thanks in great part to the recent Iranian nuclear announcement, projected to bring with it even more volatility.

It’s unclear currently how oil prices will settle, with frequent pulses up to over $70 barrel on some days. But aside from a few glimmers of hope for an upswing in the industry, the boom is spelling doom for hundreds of thousands or workers, from the boardrooms to the Gulf platforms. The one thing there is no shortage of in the Lone Star State is uncertainty.

TAGGED AS:

• economic climate
• hydrofracking
• job loss
• oil bust