Lowest gasoline prices in years. Good
news for many. Disaster for others. My late father drummed into my thick head
that every boom is followed by a bust. The oil patch had a great run but now is
busted. What is the cause?
All this is well beyond my understanding.
I’ve read that speculation in options to buy futures, as opposed to futures,
exceed 250% of known oil reserves. Funny money chasing funny money if you will.
Trying to make sense of it all might make me a Bernie Sanders voter.
Looking around my local area you see
acres of idle equipment.
I feel for the people. A few took this
opportunity to build savings, reduce debt and buy modest homes. Others are
looking at 72 month notes on $50,000 pickups and are underwater on $450,000
homes. One woman I work with rarely sees her husband as he moves around the
country to where he can find work. He has great skills so keeps busy but at a
personal price.
We still have rigs working in the area
but mainly working existing wells to optimize their output.
The silver lining in this economic cloud
is the huge increase in infrastructure and equipment will be there when the
market conditions improve. At some point they will as we won’t stop using oil.
Our local economy is firmly anchored by
agriculture. We’ve had enough winter to keep the fields snow covered. The
mountain snow pack is at or above normal. The aquifers are in better shape than
they have been for years. Today I visited the Colorado Farm Show. The
atmosphere was upbeat.
I try to make this show each year to
restock from the one glove vendor that has real XXXL leather gloves, good quality, and
reasonable prices.
Great place for people watching. Little
kids climbing all over the farm equipment, for example. Surely the nanny
staters and helicopter parents would suffer apoplexy but no one at the show
seems to mind. Of course, their fathers are right next to them climbing on the
machinery.
These are the politest people you will
ever meet. The glove booth had some candy in a container at the edge of the
table. Watched a small hand dart in and grab a piece. The young man turned to
find his mother looking right at him. With a subtle nod from the booth owner to
the mother, the mother then gave her child a slight nod.
The large number of laptops, tablets, and
smart phones scattered around the place shows farmers and their suppliers aren’t
ignorant boobs.
Standing next to a $750,000 tractor (prime mover?) made me
think what joy it would be to be a farmer. The memories of my younger self of
the sheer hard work involved soon dissipated those thoughts.
Had a great BBQ (by Colorado standards) sandwich at the FFA
run concession. Outside some salesmen were working a Ram Truck display. Made me
smile to know I wouldn’t be doing that anymore.
6 comments:
After the last oil bust there were trucks here in Texas with bumper stickers that read "Please Lord, let there be another oil boom. This time I promise I won't piss it away."
Looks like that lesson wasn't learned.
On a more serious note, Saudia Arabia and the OPEC folks don't mind - and may even encourage - busts like this one. It gets rid of the smaller producers and shuts down wells that produce oil at the margin. Saudi Arabia's cost of production is less than $10 per barrel. They can ride out low prices to maintain/expand their market share.
Some folks are speculating Saudi Arabia is burning through their money reserves. Other OPEC countries spend it as fast as they get it.
Lots of indicators pointing to a world wide financial collapse. Interesting times?
I know how low gas prices and the oil bust make a mess of Wyoming. I hope they climb and stablize so we can put some folks back to work. I don't like paying $4.00 a gal tho. Seems we could come to a happy medium somewhere. The agriculture industry is the same way. The little guys don't get to line their pockets like the corporate giants.
Agree with you about agriculture.
Wyoming will survive but with lean times. Their ace in the hole may be the huge lithium find near Rock Springs and the rare earth deposits near Upton.
A new administration may end the war on coal.
Yep, those who are sensible will always win out. They live within their means, and actually bank money against the bad times. And that's good news for the farmers!
I'm so happy all my sons are sensible about money and debt.
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