Thursday, January 21, 2016
Crashing oil prices hit former Texas boomtowns
PEARSALL, Tex. – Back when the oil money flowed, the Location 581 Saloon would be crammed with pipefitters, welders, derrickhands, truck drivers and all sorts of oilfield workers – as many as 35 of them a night together shelling out more than $2,000 for drinks and good times.
These days, the bar in this South Texas city 50 miles southwest of San Antonio sits mostly empty, except for a few locals. On a recent early evening, three clients sat at the bar. Only two were drinking.
“It’s just like a ghost town again,” said Troy Reeves, the bar’s owner.
Pearsall, like other towns that sit atop of the Eagle Ford Shale and soared during the recent oil boom, has had a harrowing crash back to Earth, as the price of crude has plummeted. On Wednesday, the price of West Texas Intermediate dipped below $27 a barrel – a 12-year low. Just 18 months ago, the crude was trading for more than $100 a barrel.
Crude’s free fall has rattled world markets, erased billions of dollars in stocks worldwide and led to thousands of layoffs in the oil and gas sector. rly a year. But the steady march of declining prices – with no end in sight – and recent news that lifting of sanctions on Iran could deliver even more oil to the market has nudged the outlook in South Texas from depressed to near desperate.
The number of active oil and gas drilling rigs in the Eagle Ford Shale has shrunk from 259 at the boom's peak in 2012 to 68 today, according to oil field services firm Baker Hughes.
“Blood in the streets,” said David Martin Philips, a Karnes City investor who used his royalty checks from the oil companies to buy seven radio stations in the area. Not everyone diversified as smartly, he said.
Those who put their money in hotels and RV parks to house the deluge of oilfield workers that came during the boom are losing money fast as those workers were let go, Philips said. “Those people are sweating bullets right now,” he said. “There’s a tremendous amount of bankruptcies about to take place.”
Prepare yourselves if you have not already. America’s reliance on foreign oil has left us vulnerable on the international stage. It would be a gross understatement to say that many of the world’s major oil producers do not have our best interests at heart. Oil is the lifeblood of our economy.
One of the easiest ways to pull ourselves out of the ditch in this situation would be to increase domestic oil production. Our main goal should be full energy independence. It would behoove our elected officials to continue supporting or begin to support the domestic refining industry, especially since some of them enjoy globe hopping on their big jet planes, so they can sip wine with their pinkies up and bad mouth America as being too dependent on oil and being a major polluter of hydrocarbons. So much for that American Exceptionalism eh? Hypocrites much? Yeah, I'll start riding a bike when these elitist pricks do the same.
We have some other steps that must be taken to add strength and increase to our domestic oil production. Among these steps, the Keystone XL pipeline and the opening of federal and offshore lands for exploration are two ways to ensure that we can continue to enjoy the benefits of production. Because, after all, I haven't seen a filling station yet that offer hopes and dreams by the gallon to fill up a Prius... But I don't know anything... I'm just riding along so I can crash with y'all. God help us.