Crude oil is $86 today.... beginning of the end?

the problem is, it is the oil and gas industry that has been the driving force for what little economic recovery this country has had...

All the other sectors of the economy are still in recession, or very slow growth. The GDP growth for 3rd qtr 2014 was 270 billion....or 5% growth... that will all be eliminated by the loss of oil field jobs, and supporting industry.


In addition, U.S. shale oil has attracted massive amounts of foreign investment, with 100 factories that will produce oil and gas infrastructure such as pipelines, servicing equipment, and drilling rigs, scheduled to open over the next two years. This is projected to boost the nation's economy by $300 billion and create an additional 1 million jobs. At least that was the plan before the bottom fell out of the oil market.

Goldman Sachs believes the situation is much worse, with $60 per barrel oil threatening $1 trillion of new investment that would have produced an estimated 7.5 million barrels per day.This includes many U.S. shale projects in basins where the breakeven cost is now below the current $57 per-barrel price of West Texas Intermediate oil.

Another credit crisis brewing?
While the losses of junk bond investors might not seem particularly important in the grand scheme of the U.S. economy, it's important to realize that over the last few years energy has come to represent 22% of the junk bond market, up from 9% in 2009, according to Goldman Sachs and JPMorgan Chase.
Deutsche Bank said the spike in yield indicates the market is predicting a 30% default rate from smaller oil and gas producers.

 

I'm just going to appeal to anyone reading this whether these most recent allegations deserve a response.

Chibob was right, oilfield support industries also benefit from higher oil prices, I just don't think it's as widespread as he thought. One Walmart was advertising $17/hr and I know the nurse at the clinic in Dickinson where I took my physical didn't feel her wages were substantially higher because of oil business.

 

Sounds about right. The drilling and completion side will slow down first, especially the smaller companies. We haven't noticed anything significant on the production side yet in my yard. Make it while you can. I'm hoping for 3-6 more months before I have to decide whether to stay or move on.

 

Without the oilfields and supporting industry, there would be NO economic growth in the USA, we would be in a 1930's depression... that is not good for humanity. And without the jobs the oilfields provide, all economic sectors will suffer, as the 1000's of people loose their high paying jobs, and can no longer buy anything. We are talking trillions of dollars not being spent, over 2015. More than the economy has grown in a year.

Short term, rejoice in those lower fuel costs... long term everyone suffers, and since there is NO other industry growing, the suffering will be long and hard.

 

Well said.

 

There are still hiring banners posted along I-20 and a quick search of indeed.com for CDL drivers in Midland/Odessa found several recent posts. I thought this was good news until I realized that strong oil prices are bad for humanity. Evidently the future of our country is in the hands of low paid retail workers. The additional $50 they save per month on fuel is going to launch this great nation to heights never imagined. Just think of it, a chicken nugget in every pot and a beater in every garage. How fortunate we will all be to have minimum wage jobs that allow us to purchase cheap fuel. Oh happy day, happy day.

 

You kind of represent the other side except that you don't have problems with reading comprehension and you aren't a constant stream of personal attacks, if at all. I hope we can reason together, a little. I benefitted directly from the oilfield and might do so again- it's not like I'm anti-prosperity or anti-oilfield prosperity.

Let's use those numbers you've posted and put them in context. You can interpret them however you like, but let's see if we can agree on some basic facts.

The rest of the economy is languishing, and that was Peter Schiff's point in an earlier post. We're in agreement. The chart says about 1.1 million oil and gas jobs, and the back drop of that is maybe 150 million jobs overall.

It says a boost of $300 billion to the economy over the next two years, the back drop is a GNP around $17 trillion per year or $34 trillion over 2 years. Certainly an extra 1 million good jobs over the next 2 years would help a lot of people.

Not sure the benefit of propping up the junk bond market.

So OK, the booming oilfield has been a great benefit to America (I'm not arguing from an environmental perspective). It is now threatened because the Saudis have decided to sell cheap oil. Now, here is my question, are you unhappy the Saudis are selling cheap oil?

What about Americans all over the country who don't directly benefit from the oil industry but do benefit from buying gas at $2/gal instead of $3.75 per gallon? Should they be upset about the Saudis selling cheap oil as well? What about the lower cost of everything now that transportation costs are down?

I don't mean to be snippy. I think I can have a reasonable conversation with you.

 

Maybe I need to start a new website where y'all can post whatever. I went and fought in Iraq so we could hear opinions ..whether we like them or not. Will be my last post. Goof luck y'all!

 

Let's look at a single mother working at WalMart. She drives 10 miles each way to work and works 5 days/week. Her car gets 20 mpg. When gas drops from $3.75 to $2.00 she saves a whopping $8.75 per week ..... that's $455 per year. The reality is the extra money will buy a few more boxes of mac and cheese and a winter jacket for little Jonny. This is the benefit we receive for the decline of the only industriy to show any growth since the Great Recession. In a growing economy that single mother might be able to get some training and work her way into a decent paying job. In a stagnant or declining economy she will be stuck in a low paying job, but hey she'll have an extra $455 per year thanks to cheap gas. Sounds like some people can't see the forest for the trees.

When fuel prices rise the media tries to convince us that it's the end of society as we know it. When they drop they tell us to rejoice at the coming prosperity. They also tell us it makes sense to arbitrarily raise minimum wage to $15/hr in the middle of a stagnant economy. It doesn't take a genius to find fault with this way of thinking.

 

I'll save my remarks for TLeaHeart because I wouldn't expect an angry emotional response from him. You overlooked some things in your estimated 5200 driving miles per year.