THREAD: Sharing my perspective today – I’ve worked in Oil & Gas for 25+ years and now serve on the Texas House Energy Resources Committee. The price crash in WTI (West Texas Intermediate Crude) today is unprecedented.
#LetsTalkData #txlege #OilPrices
#LetsTalkData #txlege #OilPrices
We’ve been saying “unprecedented” a lot lately, so I’ll try to break this down so we understand a little more about what has happened and what it means. This really is a devastating blow to our oil industry. We’ve never EVER seen a negative price on a barrel of oil.
What happened: Demand is WAY down. Perspective: I’ve hardly started my car in a month. As product builds up, storage reaches capacity. In West Texas, there is no place to put it, and product needs to be moved to find storage.
When contracts come due and there is no place to keep product, buyers will effectively pay producers to not deliver. Producers will have to pay for storage. That is how the price per barrel appears to be negative.
What it means: Many producers will shut down wells. Workers will be let go, from roughnecks to retailers. This could massively impact the Houston (and Texas) economy just from a potential rise in unemployment alone.
This problem is acute because even much lower prices will not lead to an increase in demand. Many small operators cannot afford to stop for long and may go under. The longer this continues the worse it could get.
This is temporary, but it'll be rough for a little bit while things level out in time. Demand will surge as we start up our economy again and even more when winter comes. I know it’s hard but we must stay resilient and positive because we will recover! #LetsTalkData #OilPrices
