You will come down too soon
January 19, 2015 11:24 AM Subscribe
A Mexican restaurant has started a Sunday brunch to expand its revenues beyond dinner. A Mercedes dealer, anticipating reduced demand, is prepared to emphasize repairs and sales of used cars. And people are cutting back at home, rethinking their vacation plans and cutting the hours of their housemaids and gardeners.
In Texas, they're hunkering down for the Oil Bust.
In Texas, they're hunkering down for the Oil Bust.
Dom Pérignon out of their cowboy boots.
That, doesn't seem tasty.
posted by Drinky Die at 11:35 AM on January 19, 2015 [9 favorites]
That, doesn't seem tasty.
posted by Drinky Die at 11:35 AM on January 19, 2015 [9 favorites]
On one hand, I hate cheap oil. On the other hand, I like to see people actively involved in killing the earth get a smack upside the head from karma.
posted by entropicamericana at 11:47 AM on January 19, 2015 [8 favorites]
posted by entropicamericana at 11:47 AM on January 19, 2015 [8 favorites]
I keep telling people, that pipeline right-of-way politicians keep trying to get?
It ain't going to be used for heavy tar sands oil, no matter what they say now.
It's for glacial meltwater, to replace the dying Colorado River.
Why let Canada melt and run down the rivers to the sea, free, when you can tap and sell it?
posted by hank at 11:48 AM on January 19, 2015 [12 favorites]
It ain't going to be used for heavy tar sands oil, no matter what they say now.
It's for glacial meltwater, to replace the dying Colorado River.
Why let Canada melt and run down the rivers to the sea, free, when you can tap and sell it?
posted by hank at 11:48 AM on January 19, 2015 [12 favorites]
The people who do the most damage to the earth will be temporarily inconvenienced, and all of the folks in service economy jobs who are barely keeping afloat from the crumbs tossed their way by the biggest environmental offenders will take the brunt of this.
Trickle-down economics on MetaFilter? :)
The low price of oil is great. Something that cost sixty or seventy dollars every week now costs half that. When you're a working stiff, that's literally money in the bank.
posted by resurrexit at 11:57 AM on January 19, 2015 [7 favorites]
Trickle-down economics on MetaFilter? :)
The low price of oil is great. Something that cost sixty or seventy dollars every week now costs half that. When you're a working stiff, that's literally money in the bank.
posted by resurrexit at 11:57 AM on January 19, 2015 [7 favorites]
Vox: North Dakota’s quest not to blow its oil wealth.
The effects on west Texas are going to pale in comparison to what could happen to North Dakota. Before the oil boom the state was looking at a demographic crisis where out-migration (/raises hand) and deaths were outpacing births. Now the population has grown from 650k to 725k with some communities in the heart of the bakken more than doubling their population in 10-years.
Ber and anyone else that's out there: How's it going?
posted by nathan_teske at 11:58 AM on January 19, 2015 [3 favorites]
The effects on west Texas are going to pale in comparison to what could happen to North Dakota. Before the oil boom the state was looking at a demographic crisis where out-migration (/raises hand) and deaths were outpacing births. Now the population has grown from 650k to 725k with some communities in the heart of the bakken more than doubling their population in 10-years.
Ber and anyone else that's out there: How's it going?
posted by nathan_teske at 11:58 AM on January 19, 2015 [3 favorites]
The low price of oil is great. Something that cost sixty or seventy dollars every week now costs half that. When you're a working stiff, that's literally money in the bank.
Lower Oil Prices Provide Benefits to U.S. Workers
Lower Oil Prices Provide Benefits to U.S. Workers
At the opposite end of the wealth spectrum, especially in states like this one, people are still grappling with difficult financial choices, despite the seeming windfall from lower energy costs.posted by a lungful of dragon at 12:05 PM on January 19, 2015 [5 favorites]
For Ms. Smith, the lower oil and gas prices mean she is talking with her husband about possibly quitting the second job she took on after they fell behind on bills last winter, despite the heating assistance they received through Community Concepts, which helps low-income residents in western Maine.
She works 60 to 80 hours a week and worries that she is not spending enough time with the couple’s four children, including a grandchild they are raising. First, though, Ms. Smith said she would like to catch up on current bills and “maybe get a little bit of money put away just in case things decide to go south.”
Ms. Smith’s fear, echoed by other still-cautious residents here, is that prices will turn back up, squeezing household budgets again.
“Us small people, we just see it go up and down, up and down,” she said. “We throw a party when it’s down — but not too much of a party because we know it’s going up.”
Remember when high oil prices were going to kill the economy? Now the same people are yammering that low oil prices will kill the economy. As per Texas, they could be right as far as the energy sector is concerned, but do you see me crying?
The only thing that concerns me is consumption will go back up & that alternative sources won't be as cheap by comparison so cheap oil could set us back a bit on our overall bid against dependency because people are short-term thinkers. Cheap oil is not the greatest news if you're concerned with global warming.
posted by Devils Rancher at 12:10 PM on January 19, 2015 [4 favorites]
The only thing that concerns me is consumption will go back up & that alternative sources won't be as cheap by comparison so cheap oil could set us back a bit on our overall bid against dependency because people are short-term thinkers. Cheap oil is not the greatest news if you're concerned with global warming.
posted by Devils Rancher at 12:10 PM on January 19, 2015 [4 favorites]
Being able to pay off last year's heating bills is nice but it does suck that Texans who drive Mercedes will have to pour in a fresh bottle of wiper fluid instead of buying a new Merc when the windshields get dirty, though. Rough times are coming for the rich, for sure. Now watch this drive.
posted by a lungful of dragon at 12:11 PM on January 19, 2015 [15 favorites]
posted by a lungful of dragon at 12:11 PM on January 19, 2015 [15 favorites]
When I first moved to Austin, I commented to my girlfriend's mother, that I noticed the city seemed to built in phases. She's lived her her whole adult life, and said that the city has gone through a series of financial and population boom and busts. Austin definitely isn't the center of Texas oil, but I couldn't help thinking while filling up this weekend that cheap oil would impact the city.
This fall, the city also rejected a rail project that would have partially been funded by state tax reserves from oil receipts. I wonder if that money will be there the next time they try to create a rail system.
posted by lownote at 12:21 PM on January 19, 2015 [3 favorites]
This fall, the city also rejected a rail project that would have partially been funded by state tax reserves from oil receipts. I wonder if that money will be there the next time they try to create a rail system.
posted by lownote at 12:21 PM on January 19, 2015 [3 favorites]
Low oil prices helps virtually every sector of the economy-- other than energy. Low oil prices also hurt petro states such as Russia and Iran. OPEC (i.e. the Saudis) are finally feeling confident enough to play the long game: Don't cut production until the entire U.S./Canadian oil boom is dead.
Now if congress would only pass a 1c/gal tax used as investment in renewables, this thing would be an unqualified win for pretty much everyone in the country. I'm not holding myCO2 breath.
posted by gwint at 12:27 PM on January 19, 2015 [9 favorites]
Now if congress would only pass a 1c/gal tax used as investment in renewables, this thing would be an unqualified win for pretty much everyone in the country. I'm not holding my
posted by gwint at 12:27 PM on January 19, 2015 [9 favorites]
On one hand, I hate cheap oil. On the other hand, I like to see people actively involved in killing the earth get a smack upside the head from karma.
The environmental upside of lower gas prices is that it makes risky and/or expensive oil extraction projects like Arctic drilling or shale oil less appealing. So there's that!
posted by lunasol at 12:31 PM on January 19, 2015 [7 favorites]
The environmental upside of lower gas prices is that it makes risky and/or expensive oil extraction projects like Arctic drilling or shale oil less appealing. So there's that!
posted by lunasol at 12:31 PM on January 19, 2015 [7 favorites]
If you'd told people around 1975 that the leading economic issue at the beginning of 2015 would be an oil glut leading to tumbling prices you would have blown their minds.
posted by Segundus at 12:34 PM on January 19, 2015 [23 favorites]
posted by Segundus at 12:34 PM on January 19, 2015 [23 favorites]
Then tell them that Reagan would be President, Lennon would be shot, and bell-bottoms would come back into fashion after 20 years but those jean jackets with rhinestones never would.
posted by thelonius at 12:37 PM on January 19, 2015 [14 favorites]
posted by thelonius at 12:37 PM on January 19, 2015 [14 favorites]
I grew up in Houston in the 1980s when oil went from $120/bbl to $30/bbl. It was ugly, awful. Whole high rise buildings standing empty, not quite finished. Lots of folks out of work. It got so bad in 1986 the city issued I'm Houston Proud! bumper stickers, which of course immediately got remixed to "I'm Houston Poor!". Even Jean Michele Jarre took pity on us, playing a giant (and awesome) electro-easy-listening concert for the whole city on harp made out of lasers. We felt a little better.
Last week Houston oil-services giant Schlumberger announced 9000 layoffs. My friends who still live there all passed that around Facebook with notes about how this was the first of what is likely to be a string of very bad news.
I'd give more credence to the "oil is evil" schadenfreude if it came with a little empathy for the people who make money from energy production. Both directly, the roughneck out of a job because the well is no longer profitable to operate. And someone three jobs downstream, the undocumented Guatemalan housecleaner who works for the second generation Vietnamese accountant who works for some good ol' boy manager at Shell who just got made redundant. People like to complain about oil, but they sure do like the convenient electricity and transportation it provides.
posted by Nelson at 1:07 PM on January 19, 2015 [17 favorites]
Last week Houston oil-services giant Schlumberger announced 9000 layoffs. My friends who still live there all passed that around Facebook with notes about how this was the first of what is likely to be a string of very bad news.
I'd give more credence to the "oil is evil" schadenfreude if it came with a little empathy for the people who make money from energy production. Both directly, the roughneck out of a job because the well is no longer profitable to operate. And someone three jobs downstream, the undocumented Guatemalan housecleaner who works for the second generation Vietnamese accountant who works for some good ol' boy manager at Shell who just got made redundant. People like to complain about oil, but they sure do like the convenient electricity and transportation it provides.
posted by Nelson at 1:07 PM on January 19, 2015 [17 favorites]
Don't cut production until the entire U.S./Canadian oil boom is dead.
The funny thing about oil you don't pump out of the ground is, it's still there in the ground.
posted by Kadin2048 at 1:10 PM on January 19, 2015 [3 favorites]
The funny thing about oil you don't pump out of the ground is, it's still there in the ground.
posted by Kadin2048 at 1:10 PM on January 19, 2015 [3 favorites]
Yes and no. Many fields, once started, get damaged when production is stopped. Oil may become unrecoverable (or less recoverable). It can get worse if the fields are shutdown poorly.
Or even maliciously. A large fraction of Kuwait's oil is now unrecoverable because Iraq sabotaged the wells as the Iraqi army retreated in 1991.
posted by bonehead at 1:15 PM on January 19, 2015 [3 favorites]
Or even maliciously. A large fraction of Kuwait's oil is now unrecoverable because Iraq sabotaged the wells as the Iraqi army retreated in 1991.
posted by bonehead at 1:15 PM on January 19, 2015 [3 favorites]
The only thing that concerns me is consumption will go back up & that alternative sources won't be as cheap by comparison so cheap oil could set us back a bit on our overall bid against dependency because people are short-term thinkers. Cheap oil is not the greatest news if you're concerned with global warming.
I think that anyone who believes these lower oil prices are anything but a deliberate attempt to throw a wench in the speed of adoption of alternative energy sources is kidding themselves.
posted by Caduceus at 1:21 PM on January 19, 2015 [12 favorites]
I think that anyone who believes these lower oil prices are anything but a deliberate attempt to throw a wench in the speed of adoption of alternative energy sources is kidding themselves.
posted by Caduceus at 1:21 PM on January 19, 2015 [12 favorites]
MoonOrb: When your region's economy depends heavily on oil production and you lose your minimum wage job as a result of the suffering inflicted by a bust, relief at the gas pump is kind of cold comfort.This is a very locallized viewpoint. Sure, the Piggly-Wiggly grocery bagger in Houston is going to suffer, but 50 grocery baggers across the US will be able to afford to pay off a bit of debt with unspent gas money.
Surprise! There's no way on Earth to change the economy in which some poor people won't suffer. (And some rich guy will have to cut back on gifts to his mistress, so there's that.) Still, if 50 more people get to keep their miserable, poverty-level jobs for every one that goes unemployed, it's pretty clear that cheap fuel benefits the poor overall.
posted by IAmBroom at 1:28 PM on January 19, 2015 [3 favorites]
Throw a wrench into alternative energy sources? I thought we were throwing this wrench at Russia.
posted by oceanjesse at 1:33 PM on January 19, 2015 [3 favorites]
posted by oceanjesse at 1:33 PM on January 19, 2015 [3 favorites]
Common wisdom, at least in The Economist, is that it's mostly Saudi Arabia throwing a wrench at all the upstart oil producers. Particularly fracking and other new drilling techniques in the United States.
posted by Nelson at 1:37 PM on January 19, 2015 [8 favorites]
posted by Nelson at 1:37 PM on January 19, 2015 [8 favorites]
Throw a wrench into alternative energy sources? I thought we were throwing this wrench at Russia.
At the end of the article “At $45 a barrel, it shuts down nearly every project,” Steve J. McCoy, Latshaw Drilling’s director of business development, told Mr. Pruett and his guests. “The Saudis understand and they are killing us.”
Is there any paranoia like Texan Paranoia ?
posted by Pogo_Fuzzybutt at 1:38 PM on January 19, 2015 [3 favorites]
mostly Saudi Arabia throwing a wrench at all the upstart oil producers.
Isn't there something of a brewing succession crisis in the Saudi monarchy? King Abdullah is 90. I wonder how much of the oil price manipulation is related to internal Saudi issues.
posted by ndfine at 1:41 PM on January 19, 2015
Isn't there something of a brewing succession crisis in the Saudi monarchy? King Abdullah is 90. I wonder how much of the oil price manipulation is related to internal Saudi issues.
posted by ndfine at 1:41 PM on January 19, 2015
It's two birds with one wrench.
bonehead: "Many fields, once started, get damaged when production is stopped. Oil may become unrecoverable (or less recoverable). It can get worse if the fields are shutdown poorly."
I'm not sure how much of this applies to oil sands/shale though which is a big part of the boom. Rocks aren't hurt much by just sitting around.
Things are going to be mighty interesting (in the chinese curse) sense in Alberta for a while. I'm really interested to see how this shakes out during the federal election.
posted by Mitheral at 1:41 PM on January 19, 2015
bonehead: "Many fields, once started, get damaged when production is stopped. Oil may become unrecoverable (or less recoverable). It can get worse if the fields are shutdown poorly."
I'm not sure how much of this applies to oil sands/shale though which is a big part of the boom. Rocks aren't hurt much by just sitting around.
Things are going to be mighty interesting (in the chinese curse) sense in Alberta for a while. I'm really interested to see how this shakes out during the federal election.
posted by Mitheral at 1:41 PM on January 19, 2015
I don't think that's paranoia at all, simply a statement of fact. SA is trying to drive the higher cost sources of oil into shutdown mode and cripple future investment in the same to regain market share. I suspect the Saudi's want to be assured that NA won't ship oil to China and Russia isn't able to steal markets in Europe, either.
posted by bonehead at 1:43 PM on January 19, 2015 [2 favorites]
posted by bonehead at 1:43 PM on January 19, 2015 [2 favorites]
I know this is really short sighted, but I've been able to go visit my family so much because of cheap oil now, take vacations, just drive around because I want to. I've not been able to do that in my adult life. Gas has been too expensive.
So it may not be good in the long run, but as someone who has no say in how things are going, I'm enjoying this (very cheap) ride until it busts.
posted by DriftingLotus at 1:44 PM on January 19, 2015 [7 favorites]
So it may not be good in the long run, but as someone who has no say in how things are going, I'm enjoying this (very cheap) ride until it busts.
posted by DriftingLotus at 1:44 PM on January 19, 2015 [7 favorites]
That's true, I don't think extractability of either tight oil or bitumen oil sands are effected by shut down very much, but I'm hardly an expert on that side of things.
posted by bonehead at 1:45 PM on January 19, 2015
posted by bonehead at 1:45 PM on January 19, 2015
I don't think that this wrench is 'aimed' at renewables or anything else - I do think that it's a perfect storm of awful for fossil fuel companies. If oil drops to $30/bbl and sits on the floor for several years, then, sure, that might make some people put off buying solar panels, and might make investing in battery technologies seem like a further-out ROI. But then either oil prices go up or the company folds. At that point, solar panels and battery tech are back on the rise. Make no mistake - renewables will win out because oil is dirty, volatile, increasingly difficult to extract and, ultimately, finite. There are plenty of people (and the number is growing) who understand this and are just betting on the clear long-term winner despite the current attractive cost of Brent / WTI. Yes, it's going to hurt some economies, and some will be virtually crippled.
But it was going to happen anyway.
posted by eclectist at 1:53 PM on January 19, 2015 [1 favorite]
But it was going to happen anyway.
posted by eclectist at 1:53 PM on January 19, 2015 [1 favorite]
Things are going to be mighty interesting (in the chinese curse) sense in Alberta for a while.
Alberta is most definitely going to get hit hardest, is being hit now, according to the folks I know and the reports in the news. However both Saskatchewan and Manitoba are right in the middle of a massive scale-up for the northern Bakken formation. SKs GDP growth is set to overtake AB this year. It's going to hurt all across the Prairies.
posted by bonehead at 1:58 PM on January 19, 2015 [1 favorite]
Alberta is most definitely going to get hit hardest, is being hit now, according to the folks I know and the reports in the news. However both Saskatchewan and Manitoba are right in the middle of a massive scale-up for the northern Bakken formation. SKs GDP growth is set to overtake AB this year. It's going to hurt all across the Prairies.
posted by bonehead at 1:58 PM on January 19, 2015 [1 favorite]
The effects on west Texas are going to pale in comparison to what could happen to North Dakota.
I lived in rural western North Dakota in the early 90s when gas was $1/gal. That region was booming in the 70s but by 1992 it was practically ghost towns. A big-city friend bought a house near Killdeer for $2000. Rent was basically a rounding error, lots of owners were glad to see ANYONE living in a property, just to maintain it.
ND at that time had other economic engines, particularly agriculture and a small but not-insignificant long-distance services industry (read: telecom, telemarketing, call centers, insurance support etc.) The state was emptying but mainly in rural areas, and my impression was that careful financial management and a broad tax base left the bigger cities in pretty good shape. Rent in Grand Forks (where my GF lived) was definitely not $0.
Disclaimer: these are the impressions of a 21-y.o., from 20+ years ago.
posted by axoplasm at 2:03 PM on January 19, 2015 [1 favorite]
I lived in rural western North Dakota in the early 90s when gas was $1/gal. That region was booming in the 70s but by 1992 it was practically ghost towns. A big-city friend bought a house near Killdeer for $2000. Rent was basically a rounding error, lots of owners were glad to see ANYONE living in a property, just to maintain it.
ND at that time had other economic engines, particularly agriculture and a small but not-insignificant long-distance services industry (read: telecom, telemarketing, call centers, insurance support etc.) The state was emptying but mainly in rural areas, and my impression was that careful financial management and a broad tax base left the bigger cities in pretty good shape. Rent in Grand Forks (where my GF lived) was definitely not $0.
Disclaimer: these are the impressions of a 21-y.o., from 20+ years ago.
posted by axoplasm at 2:03 PM on January 19, 2015 [1 favorite]
I wonder if that money will be there the next time they try to create a rail system.
It won't be.
...for one thing, that there is money that belongs to the taxpayers and ought rightly to be given back to them so as to get me a 15% boost in the polls.
posted by aramaic at 2:10 PM on January 19, 2015 [1 favorite]
It won't be.
...for one thing, that there is money that belongs to the taxpayers and ought rightly to be given back to them so as to get me a 15% boost in the polls.
posted by aramaic at 2:10 PM on January 19, 2015 [1 favorite]
Ber and anyone else that's out there: How's it going?
It has slowed down. First we got hit with brutal winter temps starting in November and the current thaw was the first break we've had since then. That's always guaranteed to clean out some of the southerners and carpetbaggers. Then the prices declined and the industry has slowed drilling activity to the four core counties. Rig count and drilling permits have dropped. But there are a lot of wells and those are pumping regardless of price. Most of these moved into the black within months of drilling so even at a low oil price, it's still all gravy to the oil companies. The lack of pipelines means the trucks are still running from well to well, filling up on crude or refuse water, pounding our already battered township roads to bedrock.
The plan for most of the companies was to come back to the existing wells in 2015 and 2016 to turn single well pads into several wells in both the Bakken and Three Forks formations, but now they're shelving these plans until the price goes back up. It seems they are pretty sure that the price will go up but no one knows for sure. Maybe they're counting on unrest in the Middle East or Putin doing something rash. Hell if I know.
The state legislature is not entirely foolish. They've seen booms and busts before and they can pretty much be counted on to not fuck that up. Our governor is an idiot who only asks for a color preference when an oil man says "shit" but even he's not going to misbehave in a bust. But it is good for the state to have a breather from all the chaos. The hope is that a lot of the lowlifes that have shown up here for easy money and crime will head for greener pastures where the words "wind chill" are unheard of. We hope.
I get a small amount of royalties and the checks have really taken a nose dive. Sure, I'm paying a lot less for gas but I would like to see the damn things stabilize. My family keeps trading emails on what's happening in the oil markets and various predictions. I'll ride it out but it's so strange, so surreal to be in this situation where a good Farmers Union Democrat like me keeps an eye on the WTI.
posted by Ber at 2:15 PM on January 19, 2015 [18 favorites]
It has slowed down. First we got hit with brutal winter temps starting in November and the current thaw was the first break we've had since then. That's always guaranteed to clean out some of the southerners and carpetbaggers. Then the prices declined and the industry has slowed drilling activity to the four core counties. Rig count and drilling permits have dropped. But there are a lot of wells and those are pumping regardless of price. Most of these moved into the black within months of drilling so even at a low oil price, it's still all gravy to the oil companies. The lack of pipelines means the trucks are still running from well to well, filling up on crude or refuse water, pounding our already battered township roads to bedrock.
The plan for most of the companies was to come back to the existing wells in 2015 and 2016 to turn single well pads into several wells in both the Bakken and Three Forks formations, but now they're shelving these plans until the price goes back up. It seems they are pretty sure that the price will go up but no one knows for sure. Maybe they're counting on unrest in the Middle East or Putin doing something rash. Hell if I know.
The state legislature is not entirely foolish. They've seen booms and busts before and they can pretty much be counted on to not fuck that up. Our governor is an idiot who only asks for a color preference when an oil man says "shit" but even he's not going to misbehave in a bust. But it is good for the state to have a breather from all the chaos. The hope is that a lot of the lowlifes that have shown up here for easy money and crime will head for greener pastures where the words "wind chill" are unheard of. We hope.
I get a small amount of royalties and the checks have really taken a nose dive. Sure, I'm paying a lot less for gas but I would like to see the damn things stabilize. My family keeps trading emails on what's happening in the oil markets and various predictions. I'll ride it out but it's so strange, so surreal to be in this situation where a good Farmers Union Democrat like me keeps an eye on the WTI.
posted by Ber at 2:15 PM on January 19, 2015 [18 favorites]
The funny thing about oil you don't pump out of the ground is, it's still there in the ground.
Just like diamonds
posted by any major dude at 2:31 PM on January 19, 2015 [1 favorite]
Just like diamonds
posted by any major dude at 2:31 PM on January 19, 2015 [1 favorite]
I know quite a few people working in the Oil & Gas arena here, and the layoffs have definitely started. As mentioned above, Schlumberger announced 9000, Haliburton laid off 1000 in December. This is not going to be pretty here. Houston's tried to diversify beyond oil since the last bust, but it's still the predominant employer. People interested in the actual numbers can look at Baker Hughes rig count, which posted a 4% drop last week.
posted by Runes at 2:40 PM on January 19, 2015 [3 favorites]
posted by Runes at 2:40 PM on January 19, 2015 [3 favorites]
Opinions are like kittens I was giving them away
Modest Mouse - Out of Gas
posted by z11s at 2:54 PM on January 19, 2015 [3 favorites]
Modest Mouse - Out of Gas
posted by z11s at 2:54 PM on January 19, 2015 [3 favorites]
Last week Houston oil-services giant Schlumberger announced 9000 layoffs.
I grew up in Houston and all my friends in "de awl bidness" are posting notices about layoffs and the like. Reminds me of "Lord, just give us one more oil boom; we promise we won't piss this one away" (a popular bumper sticker in the mid 80s bust).
posted by immlass at 3:01 PM on January 19, 2015 [7 favorites]
I grew up in Houston and all my friends in "de awl bidness" are posting notices about layoffs and the like. Reminds me of "Lord, just give us one more oil boom; we promise we won't piss this one away" (a popular bumper sticker in the mid 80s bust).
posted by immlass at 3:01 PM on January 19, 2015 [7 favorites]
Here's the thing - unless petroleum products are replaced as the primary fuel source for so much of the modern world, this is just a moment in the over-all trajectory of oil field developments. The reason for the US boom was because oil got expensive enough for previously too expensive methods became a reasonable cost in the total cost of extracting oil (more or less).
The prices won't stay down forever. This sucks for the oil field economies now, but it won't last. The oil is still in the ground, and until it gets used up, someone's going to come back for it, even if it's twice as hard to extract because someone did a crap job of shutting down the wells in this price drop.
People who are laid off will be re-hired in [a few/many] months, and the oil field economies will rebound, and the rest of the economy will have to deal with rising fuel costs once again. This is a big deal now because of how big the US oil-related economies grew, and how fast. Maybe how local communities can start building up their infrastructure and public services in time for the boom to return.
posted by filthy light thief at 3:27 PM on January 19, 2015 [2 favorites]
The prices won't stay down forever. This sucks for the oil field economies now, but it won't last. The oil is still in the ground, and until it gets used up, someone's going to come back for it, even if it's twice as hard to extract because someone did a crap job of shutting down the wells in this price drop.
People who are laid off will be re-hired in [a few/many] months, and the oil field economies will rebound, and the rest of the economy will have to deal with rising fuel costs once again. This is a big deal now because of how big the US oil-related economies grew, and how fast. Maybe how local communities can start building up their infrastructure and public services in time for the boom to return.
posted by filthy light thief at 3:27 PM on January 19, 2015 [2 favorites]
The state legislature is not entirely foolish. They've seen booms and busts before and they can pretty much be counted on to not fuck that up. Our governor is an idiot who only asks for a color preference when an oil man says "shit" but even he's not going to misbehave in a bust.
I have to wonder, though, what's going to happen to the commercial sector. Larger cities/towns like Dickinson, Williston, Killdeer and Watford City will likely stabilize at a population level that, while higher than pre-boom population or expected growth, is not nearly enough to feed the businesses that grew up around the boom.
If anyone wants to see some scary numbers, check out slide 12 in this presentation from the City of Dickinson, ND. Estimated 40% population growth in two years. 216% increase in number of hotel rooms. Sales tax revenue more than doubled.
posted by nathan_teske at 3:31 PM on January 19, 2015 [1 favorite]
I have to wonder, though, what's going to happen to the commercial sector. Larger cities/towns like Dickinson, Williston, Killdeer and Watford City will likely stabilize at a population level that, while higher than pre-boom population or expected growth, is not nearly enough to feed the businesses that grew up around the boom.
If anyone wants to see some scary numbers, check out slide 12 in this presentation from the City of Dickinson, ND. Estimated 40% population growth in two years. 216% increase in number of hotel rooms. Sales tax revenue more than doubled.
posted by nathan_teske at 3:31 PM on January 19, 2015 [1 favorite]
For all the people who profit or love people who profit from energy extraction: Do you have any idea how oil booms deform the body politic? How obnoxious it is to have to take idiots like George W Bush and Rick Perry seriously as politicians because their asses happened to sit above oil? How in America the entire nearly forgotten ethic of Yankee ingenuity has been overshadowed by the (Southern/racist) ethic of extraction and inherited mineral wealth? Wars begun for the sake of Halliburton? Internationally and religiously how blasphemous it is that the diversity of local Islamic traditions and thought has been distorted by Saudi oil money supporting the Wahabist/Salafists? The conscious and voluntary stupidity of the "gigantic pickup" ethos as a measure of manliness and sixty years of building car-centric suburbs? Let the Saudis pump, so that this country can wake up from the delusions that have clouded its mind since the 70s oil shocks.
posted by Captain l'escalier at 3:54 PM on January 19, 2015 [19 favorites]
posted by Captain l'escalier at 3:54 PM on January 19, 2015 [19 favorites]
$30/bbl oil isn't going to negatively impact the gigantic pickup or suburb living crowd.
posted by Mitheral at 4:24 PM on January 19, 2015
posted by Mitheral at 4:24 PM on January 19, 2015
Good news for Tx. Democrats if they can seize upon the advantages presented by a wobbly economy.
Doubt that. Hard times seems to encourage xenophobia and "fuck you, I got mine"-ism. The Democratic party is probably not the party best positioned to take advantage of that.
posted by ctmf at 4:26 PM on January 19, 2015 [4 favorites]
Doubt that. Hard times seems to encourage xenophobia and "fuck you, I got mine"-ism. The Democratic party is probably not the party best positioned to take advantage of that.
posted by ctmf at 4:26 PM on January 19, 2015 [4 favorites]
I don't understand what the Saudis are hoping to accomplish here. Whether they're trying to kill North American fracking/tar sands or stop electric car development, they're not going to destroy either one. They may delay it a while, but, once the price of oil goes back up, which it is certain to do, both of those activities will come back online, and they'll be right back where they started.
posted by InsertNiftyNameHere at 4:56 PM on January 19, 2015
posted by InsertNiftyNameHere at 4:56 PM on January 19, 2015
Ber and anyone else that's out there: How's it going?
It's been getting tough in the field since Autumn, as people saw prices continue to take a tumble. Here in Calgary, there's layoffs already been announced with more to come. I'm 20 years in the industry, onshore, offshore, all over and now I'm an office boy. Everyone is being asked to cut costs and it has a knock on effect on people's livelihoods, the economy of the Province, the Texan economy, North Sea (hello independent Scotland) and every region where resource plays form a major part of the regional industry.
It's all well and good to laugh at the horrible exploiters of the Earth getting their comeuppance, but if the demand wasn't there, then those hydrocarbons would stay in the ground and we'd all go work in another industry. Low oil prices certainly doesn't help the economics of solar and other alternatives that we desperately need to develop yesterday.
As it is, I look at the people in my team and wonder about which ones I may be forced to layoff in the very near future. All of them have families and loved ones to provide for, it's not a pleasant thought. Last time this happened in 2008, I had to fire 50+ people in various areas around the North Sea. It doesn't get any easier.
I'll drop into the thread later after I get home if anyone has any questions.
posted by arcticseal at 5:07 PM on January 19, 2015 [11 favorites]
It's been getting tough in the field since Autumn, as people saw prices continue to take a tumble. Here in Calgary, there's layoffs already been announced with more to come. I'm 20 years in the industry, onshore, offshore, all over and now I'm an office boy. Everyone is being asked to cut costs and it has a knock on effect on people's livelihoods, the economy of the Province, the Texan economy, North Sea (hello independent Scotland) and every region where resource plays form a major part of the regional industry.
It's all well and good to laugh at the horrible exploiters of the Earth getting their comeuppance, but if the demand wasn't there, then those hydrocarbons would stay in the ground and we'd all go work in another industry. Low oil prices certainly doesn't help the economics of solar and other alternatives that we desperately need to develop yesterday.
As it is, I look at the people in my team and wonder about which ones I may be forced to layoff in the very near future. All of them have families and loved ones to provide for, it's not a pleasant thought. Last time this happened in 2008, I had to fire 50+ people in various areas around the North Sea. It doesn't get any easier.
I'll drop into the thread later after I get home if anyone has any questions.
posted by arcticseal at 5:07 PM on January 19, 2015 [11 favorites]
Based on things I've heard that I cannot discuss in detail and therefore you are free to dismiss, the economies of the (still assumed to be an) oil boom are already having negative impact on the decision making at UND.
posted by flaterik at 5:49 PM on January 19, 2015 [1 favorite]
posted by flaterik at 5:49 PM on January 19, 2015 [1 favorite]
I don't understand what the Saudis are hoping to accomplish here.
I don't, either, and I am skeptical that anyone outside of Saudi Arabia actually does. There are almost certainly many angles to it, including ones that have nothing to do with the United States or the West at all. It could be them deciding to shaft the Russians, or it could be entirely internal, or it could be and probably is a combination of factors. The problem with a largely opaque monarchy is that you can't really tell for sure.
Setting aside the effects on individual Americans, it is good for America as a whole; the direction we were heading—of becoming basically a resource-extraction economy—virtually never ends well. We should be perfectly happy to let the Saudis flirt with Dutch Disease for another generation if it's their wont to do so.
The US is in a pretty good place, relative to some other large economies who have been flirting with becoming petro-states (e.g. Russia), to grow the manufacturing and transportation sectors. Traditionally both have had much more favorable impacts to employment than resource extraction.
So whatever's driving the Saudis to set their own house on fire, I sure hope they keep it up.
posted by Kadin2048 at 5:56 PM on January 19, 2015 [4 favorites]
I don't, either, and I am skeptical that anyone outside of Saudi Arabia actually does. There are almost certainly many angles to it, including ones that have nothing to do with the United States or the West at all. It could be them deciding to shaft the Russians, or it could be entirely internal, or it could be and probably is a combination of factors. The problem with a largely opaque monarchy is that you can't really tell for sure.
Setting aside the effects on individual Americans, it is good for America as a whole; the direction we were heading—of becoming basically a resource-extraction economy—virtually never ends well. We should be perfectly happy to let the Saudis flirt with Dutch Disease for another generation if it's their wont to do so.
The US is in a pretty good place, relative to some other large economies who have been flirting with becoming petro-states (e.g. Russia), to grow the manufacturing and transportation sectors. Traditionally both have had much more favorable impacts to employment than resource extraction.
So whatever's driving the Saudis to set their own house on fire, I sure hope they keep it up.
posted by Kadin2048 at 5:56 PM on January 19, 2015 [4 favorites]
Not sure if people have seen this BBC report on comments made by a former senior advisor to the Saudi oil minister.
Mohammed al-Sabban said the country's policy was to defend its current market share by enduring low prices.
"You need to allow prices to go as low as possible in order to see those marginal producers move out of the market," he said.
posted by arcticseal at 6:08 PM on January 19, 2015 [1 favorite]
Mohammed al-Sabban said the country's policy was to defend its current market share by enduring low prices.
"You need to allow prices to go as low as possible in order to see those marginal producers move out of the market," he said.
posted by arcticseal at 6:08 PM on January 19, 2015 [1 favorite]
You need to allow prices to go as low as possible in order to see those marginal producers move out of the market
But then what? It's a time-buying stall, not a plan. Those marginal producers will jump back in if you let the price go back up, possibly having figured out in the meantime how to do it somewhat less expensively, all while you're losing potential money and expending your finite resource. While they are not.
Sounds like a long-term loser to me.
posted by ctmf at 6:17 PM on January 19, 2015 [2 favorites]
But then what? It's a time-buying stall, not a plan. Those marginal producers will jump back in if you let the price go back up, possibly having figured out in the meantime how to do it somewhat less expensively, all while you're losing potential money and expending your finite resource. While they are not.
Sounds like a long-term loser to me.
posted by ctmf at 6:17 PM on January 19, 2015 [2 favorites]
btw, if you want cruft-free charts of the price of oil (daily/weekly/monthly/yearly): howmuchisoil.com has been my go to site. A MeFi Project from 2008 by Godbert.
posted by gwint at 6:20 PM on January 19, 2015 [3 favorites]
posted by gwint at 6:20 PM on January 19, 2015 [3 favorites]
IAmBroom: "Sure, the Piggly-Wiggly grocery bagger in Houston is going to suffer"
The Piggly-Wiggly grocery bagger in Houston is probably going to be ecstatic that oil prices have come down, since he has to drive 190 miles to work. The Kroger grocery bagger, on the other hand...
posted by Bugbread at 6:29 PM on January 19, 2015 [11 favorites]
The Piggly-Wiggly grocery bagger in Houston is probably going to be ecstatic that oil prices have come down, since he has to drive 190 miles to work. The Kroger grocery bagger, on the other hand...
posted by Bugbread at 6:29 PM on January 19, 2015 [11 favorites]
flatterik: Based on things I've heard that I cannot discuss in detail and therefore you are free to dismiss, the economies of the (still assumed to be an) oil boom are already having negative impact on the decision making at UND.
UND makes bad decisions even without money. Throw in money and they make terrible decisions.
posted by nathan_teske at 6:41 PM on January 19, 2015
UND makes bad decisions even without money. Throw in money and they make terrible decisions.
posted by nathan_teske at 6:41 PM on January 19, 2015
Ctmf, I tend to agree. This seems to me to be the Saudi response to the Shale revolution. They are trying to take the wind out of the sails of the companies investing in the shale plays. At most, it gains them another few years of market share, but it won't eliminate the competition permanently. I suspect it's just a way of delaying the inevitable.
The small players will be driven out of business and their assets priced by bigger players. I think you're right about the technology getting cheaper and just increasing the competition to the Saudis. On the plus side, it will eliminate some of the smaller players who play fast and loose with regulations and result in better operating practices from the larger players left.
posted by arcticseal at 6:42 PM on January 19, 2015
The small players will be driven out of business and their assets priced by bigger players. I think you're right about the technology getting cheaper and just increasing the competition to the Saudis. On the plus side, it will eliminate some of the smaller players who play fast and loose with regulations and result in better operating practices from the larger players left.
posted by arcticseal at 6:42 PM on January 19, 2015
I have little sympathy for those who are actually in the oil (and gas) business during the downturns. Why? Because the industry has been like this since day one. This is not the first oil bust and it will not be the last.
If people had even the slightest inclination to be aware of the history of the industry, they would have socked away some of their immense profit for times such as these. And don't give me the "but the analysts said this time was different" excuse. They always say this time is different.
Unlike all the other working stiffs, at least the folks in the oil business can look forward to 5 years from now when prices will be high as a kite again. The rest of us aren't going to see our incomes improve until the government quits subsidizing the off shoring of everything that can be offshored.
posted by wierdo at 6:51 PM on January 19, 2015 [1 favorite]
If people had even the slightest inclination to be aware of the history of the industry, they would have socked away some of their immense profit for times such as these. And don't give me the "but the analysts said this time was different" excuse. They always say this time is different.
Unlike all the other working stiffs, at least the folks in the oil business can look forward to 5 years from now when prices will be high as a kite again. The rest of us aren't going to see our incomes improve until the government quits subsidizing the off shoring of everything that can be offshored.
posted by wierdo at 6:51 PM on January 19, 2015 [1 favorite]
Huh. When I drove through Midland five years ago it looked like a downtown that had been abandoned in 1985.
posted by RobotVoodooPower at 6:53 PM on January 19, 2015 [1 favorite]
posted by RobotVoodooPower at 6:53 PM on January 19, 2015 [1 favorite]
wierdo: "I have little sympathy for those who are actually in the oil (and gas) business during the downturns...If people had even the slightest inclination to be aware of the history of the industry, they would have socked away some of their immense profit for times such as these."
I'm gonna guess that when you say "those who are actually in the oil (and gas) business" you mean "executives who are actually in the oil (and gas) business", because the majority of the people in the oil and gas business do not have immense profit during booms. Not disagreeing with your greater point (if you're talking about execs), it's just that the phrasing took me by surprise because what I pictured when I read your first sentence didn't match what you said in the second sentence.
posted by Bugbread at 7:00 PM on January 19, 2015 [1 favorite]
I'm gonna guess that when you say "those who are actually in the oil (and gas) business" you mean "executives who are actually in the oil (and gas) business", because the majority of the people in the oil and gas business do not have immense profit during booms. Not disagreeing with your greater point (if you're talking about execs), it's just that the phrasing took me by surprise because what I pictured when I read your first sentence didn't match what you said in the second sentence.
posted by Bugbread at 7:00 PM on January 19, 2015 [1 favorite]
Is this what "peak oil" looks like?
posted by Chocolate Pickle at 7:09 PM on January 19, 2015
posted by Chocolate Pickle at 7:09 PM on January 19, 2015
Like anyone I'm enjoying paying less at the gas pump, but I can't help but see this as a weird temporary anomaly.
posted by Dip Flash at 7:29 PM on January 19, 2015 [1 favorite]
posted by Dip Flash at 7:29 PM on January 19, 2015 [1 favorite]
The average working stiff is the same as a working stiff in any industry. They collect a salary the same as most people. What makes them so worthy of your disdain? The energy industry at least pays most of them a decent wage, and is one of the few avenues for someone leaving school to work their way up through the ranks without an MBA.
Having worked on rigs for over six years in all kinds of conditions, long hours, away from home and in dangerous environments, I can tell you that the salary is well earned. Does it mean that they have more value than a school teacher? No, but that's more a fault of the value we put on education than the average worker's fault.
posted by arcticseal at 7:33 PM on January 19, 2015 [4 favorites]
Having worked on rigs for over six years in all kinds of conditions, long hours, away from home and in dangerous environments, I can tell you that the salary is well earned. Does it mean that they have more value than a school teacher? No, but that's more a fault of the value we put on education than the average worker's fault.
posted by arcticseal at 7:33 PM on January 19, 2015 [4 favorites]
But then what? It's a time-buying stall, not a plan. Those marginal producers will jump back in if you let the price go back up, possibly having figured out in the meantime how to do it somewhat less expensively, all while you're losing potential money and expending your finite resource. While they are not.
Sounds like a long-term loser to me.
Maybe, but the strategy seems to work ok for Walmart so far, and this isn't a long-term-thinking world.
Also bear in mind that the latest science indicates that 30% of remaining oil has to stay in the ground (80% of coal etc) to avoid climate disaster. Who knows, perhaps the Saudi's are thinking that the guy waiting on the sidelines not expending his finite resources is likely to become the guy whose finite resources end up being that 30% that has to stay in the ground, unsold? Maybe they have more oil than can actually be sold if they don't shrink the number of other producers?
posted by anonymisc at 8:12 PM on January 19, 2015 [2 favorites]
Sounds like a long-term loser to me.
Maybe, but the strategy seems to work ok for Walmart so far, and this isn't a long-term-thinking world.
Also bear in mind that the latest science indicates that 30% of remaining oil has to stay in the ground (80% of coal etc) to avoid climate disaster. Who knows, perhaps the Saudi's are thinking that the guy waiting on the sidelines not expending his finite resources is likely to become the guy whose finite resources end up being that 30% that has to stay in the ground, unsold? Maybe they have more oil than can actually be sold if they don't shrink the number of other producers?
posted by anonymisc at 8:12 PM on January 19, 2015 [2 favorites]
Ms. Smith’s fear, echoed by other still-cautious residents here, is that prices will turn back up, squeezing household budgets again.
Have no fear, the auto industry welcomes low oil prices!
“Canadians are finally coming back to the marketplace and buying at levels they probably should have been at long term,” Mr. DesRosiers, president of DesRosiers Automotive Consultants Inc., said in an interview Monday. “For quite a long time – it could stretch to a decade and a half to two decades – Canadians actually underbought.”
And here we were, thinking that all this time there were plenty of cars on the road.
posted by sneebler at 8:31 PM on January 19, 2015 [1 favorite]
Have no fear, the auto industry welcomes low oil prices!
“Canadians are finally coming back to the marketplace and buying at levels they probably should have been at long term,” Mr. DesRosiers, president of DesRosiers Automotive Consultants Inc., said in an interview Monday. “For quite a long time – it could stretch to a decade and a half to two decades – Canadians actually underbought.”
And here we were, thinking that all this time there were plenty of cars on the road.
posted by sneebler at 8:31 PM on January 19, 2015 [1 favorite]
Those marginal producers will jump back in if you let the price go back up
That depends. If SA believes that these producers are highly leveraged (in the case of small NA drillers) or politically unstable (Russia, Venezuela), or are still trying to gain market traction (electric cars, alternative energy), they might conclude that driving the oil price low enough, for long enough, will put a significant dent their long-term ability to compete.
posted by sophist at 10:46 PM on January 19, 2015 [1 favorite]
That depends. If SA believes that these producers are highly leveraged (in the case of small NA drillers) or politically unstable (Russia, Venezuela), or are still trying to gain market traction (electric cars, alternative energy), they might conclude that driving the oil price low enough, for long enough, will put a significant dent their long-term ability to compete.
posted by sophist at 10:46 PM on January 19, 2015 [1 favorite]
Longterm loser? That's how resource extraction usually works. It's short term "get it now while we can still make a profit!" mentality. Competition from developing technologies in NA and producers like Russia lit a fire under SA butt to stop throttling production, lest competitors gain ground and force you to lose profits. So we have today's low prices driven by increased production..
posted by 2N2222 at 11:00 PM on January 19, 2015
posted by 2N2222 at 11:00 PM on January 19, 2015
So it's bad when oil prices go high and it's bad when oil prices go low. What the -- oh, right. We elected a Democrat as president.
posted by dirigibleman at 11:55 PM on January 19, 2015 [1 favorite]
posted by dirigibleman at 11:55 PM on January 19, 2015 [1 favorite]
Chocolate Pickle: Is this what "peak oil" looks like?
Oil Price.com, Sept. 24, 2014 -- Peak Oil: Are We In The Eye Of The Storm?
I repeat, this is just a blip on the historic trends for oil costs, until demand changes downward.
posted by filthy light thief at 7:22 AM on January 20, 2015 [6 favorites]
Oil Price.com, Sept. 24, 2014 -- Peak Oil: Are We In The Eye Of The Storm?
Oil prices have climbed several-fold from where they were in the early years of the last decade – surging upwards from $20 a barrel to circa $100. This rapid jump in energy costs did slow many nations’ economies, cut oil consumption, and with some other factors set off a “great” recession. Real economic hardships have not yet occurred.(Emphasis mine.)
...
What is so interesting about all this is that a temporary surge in what was heretofore a little-known source of oil in the U.S. is masking the larger story of what is taking place in the global oil situation. The simple answer is that except for the U.S. shale oil surge, almost no increase in oil production is taking place around the world. No other country as yet has gotten significant amounts of shale oil or gas into production. Russia’s conventional oil production seems to be peaking at present, and its Arctic oil production is still many years, or perhaps even decades, away. Brazilian production is going nowhere at the minute, deepwater production in the Gulf of Mexico is stagnating, and the Middle East is busy killing itself. On top of all this, global demand for oil continues to increase by some million b/d each year – most of which is going to Asia.
I repeat, this is just a blip on the historic trends for oil costs, until demand changes downward.
posted by filthy light thief at 7:22 AM on January 20, 2015 [6 favorites]
The Saudis have had this power throughout the modern petroleum era. The key question is how much longer can they play this game? i.e. How long until they have to make an effort to extract their dwindling reserves? *That's* the long-term target for renewables taking over.
posted by whuppy at 8:06 AM on January 20, 2015 [1 favorite]
posted by whuppy at 8:06 AM on January 20, 2015 [1 favorite]
Is this what "peak oil" looks like?
Norway definitely knows what peak oil looks like. That's why they've been socking away oil revenue in their sovereign wealth fund and moving their drilling further north.
posted by a lungful of dragon at 9:16 AM on January 20, 2015
Norway definitely knows what peak oil looks like. That's why they've been socking away oil revenue in their sovereign wealth fund and moving their drilling further north.
posted by a lungful of dragon at 9:16 AM on January 20, 2015
until demand changes downward.
Arguably, that's happening in the US right now. Annual energy consumption in the US has been essentially constant for the past decade (EIA data). Consumption of petroleum is down in the US as well (residential/commercial, industrial, transportation and power).
While supply is up and refinery production is still growing, increasingly the US is turning into a finished fuel export country, and perhaps even a net crude exporter (with some fancy dancing around the export controls). With the flattening of domestic demand and increased NA supply, the US has gone from a good customer to a major competitor to the OPEC countries in the past decade.
posted by bonehead at 9:47 AM on January 20, 2015 [1 favorite]
Arguably, that's happening in the US right now. Annual energy consumption in the US has been essentially constant for the past decade (EIA data). Consumption of petroleum is down in the US as well (residential/commercial, industrial, transportation and power).
While supply is up and refinery production is still growing, increasingly the US is turning into a finished fuel export country, and perhaps even a net crude exporter (with some fancy dancing around the export controls). With the flattening of domestic demand and increased NA supply, the US has gone from a good customer to a major competitor to the OPEC countries in the past decade.
posted by bonehead at 9:47 AM on January 20, 2015 [1 favorite]
the strategy seems to work ok for Walmart so far
Walmart and Saudi Aramco aren't really in remotely the same business and I don't think comparisons between the two make a lot of sense.
Aramco and, say, Rio Tinto or Freeport-McMoRan (both mining companies)—that would make sense. However, you don't see Freeport trying to engage in price dumping, even though they certainly could. But they don't because it wouldn't make much long-term sense.
Unless you had the ability to dump and then buy up the shuttered competitors assets at fire-sale prices, and then use them to achieve a partial or complete corner, allowing you to recoup the losses achieved during the dumping with higher prices later—historically that's happened (Carnegie and Frick did it to corner the Pennsylvania coal market), but you can't really do when you are talking about largely nationally-owned oil companies and reserves (the Canadians are probably not going to sell the tar sands to Aramco)—I don't see a good angle.
But... just because it doesn't make long-term, objective economic sense doesn't mean that it's not to somebody's advantage. There could be political reasons for maintaining market share dominance that override the profit motive. Rio Tinto's shareholders presumably would choose a smaller share of a larger pie if it means they get more pie, but the Saudis might see that differently for non-economic reasons.
posted by Kadin2048 at 9:58 AM on January 20, 2015
Walmart and Saudi Aramco aren't really in remotely the same business and I don't think comparisons between the two make a lot of sense.
Aramco and, say, Rio Tinto or Freeport-McMoRan (both mining companies)—that would make sense. However, you don't see Freeport trying to engage in price dumping, even though they certainly could. But they don't because it wouldn't make much long-term sense.
Unless you had the ability to dump and then buy up the shuttered competitors assets at fire-sale prices, and then use them to achieve a partial or complete corner, allowing you to recoup the losses achieved during the dumping with higher prices later—historically that's happened (Carnegie and Frick did it to corner the Pennsylvania coal market), but you can't really do when you are talking about largely nationally-owned oil companies and reserves (the Canadians are probably not going to sell the tar sands to Aramco)—I don't see a good angle.
But... just because it doesn't make long-term, objective economic sense doesn't mean that it's not to somebody's advantage. There could be political reasons for maintaining market share dominance that override the profit motive. Rio Tinto's shareholders presumably would choose a smaller share of a larger pie if it means they get more pie, but the Saudis might see that differently for non-economic reasons.
posted by Kadin2048 at 9:58 AM on January 20, 2015
arcticseal: Having worked on rigs for over six years in all kinds of conditions, long hours, away from home and in dangerous environments, I can tell you that the salary is well earned. Does it mean that they have more value than a school teacher? No, but that's more a fault of the value we put on education than the average worker's fault.Also, rig workers are far more likely to die on the job than teachers - even teachers in dangerous neighborhoods.
When I worked a rig in the Gulf decades ago, a tool pusher died when a chain link fell on him. (For those of you who haven't been on a rig, that link weighed more than he did.) The whole "community" of rigs shuddered; as stark a reminder as the damaged and vacated rig I saw taken down overnight by a storm.
Rig workers are akin to miners - no education needed, and serious OTJ threats. There was even a sign posted outside the lunch hall, listing how much money they paid per lost body part - obviously, to limit liability lawsuits with a macabre sort of price-fixing.
posted by IAmBroom at 10:06 AM on January 20, 2015
Halliburton, Baker Hughes to lay off thousands as oil slumps. "The U.S. land rig count has fallen by 250 rigs, or about 15 percent, over the last 60 days"
posted by Nelson at 10:36 AM on January 20, 2015
posted by Nelson at 10:36 AM on January 20, 2015
This reminded me of the series of comics Kate Beaton did about the tar sands oil operation (discussed on Metafilter previously).
Big economic cycles with real human consequences.
posted by Wretch729 at 11:18 AM on January 20, 2015 [1 favorite]
Big economic cycles with real human consequences.
posted by Wretch729 at 11:18 AM on January 20, 2015 [1 favorite]
We've been through asbestos. We've been through Macondo, we've been through the Iraq war. We're the execution company.
There's something macabre about the HAL CEO saying this. And we wonder why the oil business has a bad rep.
The BH/HAL layoffs are just part of the story, HAL is trying to absorb BH to compete with SLB and form a company with half of SLB's revenue and >30k more employees. There were going to be layoffs anyway even before the downturn.
I have a buddy working as an MWD hand for a mid-tier regional service company. This week they put in place a 20% cut in day rate and 10% cut in salary. This is his first downturn and he's freaking out.
a tool pusher died when a chain link fell on him
Still happens, there's always the guy who thinks that it can't happen to him and doesn't follow procedure, or the moment's inattention. Everyone in the business has a story or ten to tell of people getting hurt or killed. There's good reason why I'm working in an office these days, loved the work offshore but once I got married I had people other than myself to worry about.
posted by arcticseal at 11:25 AM on January 20, 2015 [1 favorite]
There's something macabre about the HAL CEO saying this. And we wonder why the oil business has a bad rep.
The BH/HAL layoffs are just part of the story, HAL is trying to absorb BH to compete with SLB and form a company with half of SLB's revenue and >30k more employees. There were going to be layoffs anyway even before the downturn.
I have a buddy working as an MWD hand for a mid-tier regional service company. This week they put in place a 20% cut in day rate and 10% cut in salary. This is his first downturn and he's freaking out.
a tool pusher died when a chain link fell on him
Still happens, there's always the guy who thinks that it can't happen to him and doesn't follow procedure, or the moment's inattention. Everyone in the business has a story or ten to tell of people getting hurt or killed. There's good reason why I'm working in an office these days, loved the work offshore but once I got married I had people other than myself to worry about.
posted by arcticseal at 11:25 AM on January 20, 2015 [1 favorite]
It's amazing how fast these things can flip. The construction companies employ thousands of people. The past two years have seen a lot of development of the crude-by-rail infrastructure all across NA, driven by tight oil. Pipeline projects seem to have stalled for the moment waiting on approvals. Construction was in an insane boom talking about 200 to 300% year-on-year expansions (or more). Their biggest concerns were shortages of skilled labour and managing growth.
That's all on hold now, as far I as I can tell. Crazy boom to near shutdown in less than a month.
posted by bonehead at 11:52 AM on January 20, 2015
That's all on hold now, as far I as I can tell. Crazy boom to near shutdown in less than a month.
posted by bonehead at 11:52 AM on January 20, 2015
The Saudis have had this power throughout the modern petroleum era. The key question is how much longer can they play this game? i.e. How long until they have to make an effort to extract their dwindling reserves?
i'm wondering if the key question is just how dwindling are those reserves - could it be that they have a lot more than they've been telling us?
posted by pyramid termite at 12:50 PM on January 20, 2015
The reason I have almost as little sympathy for the field workers, landmen, geologists, loggers, and so on as I do the execs is that they do, at least those guys I have known throughout the years, get paid very well during the boom years because it's almost impossible to find enough good help. Then prices crash, work dries up, and they act as if nobody could have seen it coming.
I have more sympathy for the janitor or secretary back in the office because they never made enough to save, or at least haven't this time around. Things were different last time, though, in that the wealth managed to trickle down farther, probably because we still had factories in this country and less of the cost of society was resting on the shoulders of the poor and middle class.
Still, it should have been obvious to everyone at every level that the party would take a break eventually.
posted by wierdo at 5:55 PM on January 20, 2015 [1 favorite]
I have more sympathy for the janitor or secretary back in the office because they never made enough to save, or at least haven't this time around. Things were different last time, though, in that the wealth managed to trickle down farther, probably because we still had factories in this country and less of the cost of society was resting on the shoulders of the poor and middle class.
Still, it should have been obvious to everyone at every level that the party would take a break eventually.
posted by wierdo at 5:55 PM on January 20, 2015 [1 favorite]
Interestingly I, an electrician working industrial constrution projects, may get screwed by this oil down turn even though I've never worked an energy job. The massive lay offs to trades that are in progress means suddenly a lot more people chasing after the non-energy sector jobs. If the price remains depressed for a more than a year it's likely to depress wages and benefits in this sector.
posted by Mitheral at 6:37 PM on January 20, 2015
posted by Mitheral at 6:37 PM on January 20, 2015
Isn't there something of a brewing succession crisis in the Saudi monarchy? King Abdullah is 90.
Saudi Arabia’s new king promises continuity after death of Abdullah: Salman bin Abdulaziz’s first public remarks as monarch designed to send reassuring message of stability and cohesion
posted by homunculus at 1:31 PM on January 23, 2015
Saudi Arabia’s new king promises continuity after death of Abdullah: Salman bin Abdulaziz’s first public remarks as monarch designed to send reassuring message of stability and cohesion
posted by homunculus at 1:31 PM on January 23, 2015
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posted by Renoroc at 11:31 AM on January 19, 2015 [1 favorite]