We are in an oil bust, folks....

[Theo Walcott]

I sincerely hope that our local economy is diversified enough to handle this. Things will not be pretty if not. Analysts at MorganStanley are predicting $25/bbl oil. That is about $120 BELOW its JULY high.

Bloomberg.com: Worldwide

[betts]

Actually, if that article is correct, it won't matter if we or anyone else is diversified. The ridiculous thing is that at least half of this is panic, and the media is fueling the panic. People hear housing prices are dropping and, lo and behold, they drop. People hear we're in a recession and they stop buying, which means manufacturers can't sell their products, so they let people go and stock prices fall, and then we have people panicking and losing their jobs and so they stop buying even more. We are not using 75% less oil than we were six months ago, and so it makes no sense that prices should drop that low.

[Midtowner]

Oil was overvalued to begin with. $45/barrel ain't bad really...

[Curt]

Oil was overvalued to begin with. $45/barrel ain't bad really...

$45 a barrel is sweet, they should however keep the price around $1.70 a gallon nationwide. When ya go to a Applebees and get the same meal in Michigan for the same price you get it in Oklahoma or go to McDonalds and get a cheeseburger for a set price and go two miles away and get it for the same price why cant gas stations keep their prices the same in the chain. Why is gas sometimes .20 cents a gallon higher from one Mobil station to the next Mobil at the next corner.

[OKCMallen]

$45 a barrel is sweet, they should however keep the price around $1.70 a gallon nationwide. When ya go to a Applebees and get the same meal in Michigan for the same price you get it in Oklahoma or go to McDonalds and get a cheeseburger for a set price and go two miles away and get it for the same price why cant gas stations keep their prices the same in the chain. Why is gas sometimes .20 cents a gallon higher from one Mobil station to the next Mobil at the next corner.

I don't know about Applebee's, but McD's prices certainly do vary from place to place.

[Curt]

I don't know about Applebee's, but McD's prices certainly do vary from place to place.

I'll have to take your word for that but at least let me narrow it down to this, their prices dont change from corner to corner...I guess from state to state they do.

[OKCMallen]

I'll have to take your word for that but at least let me narrow it down to this, their prices dont change from corner to corner...I guess from state to state they do.

Ever stop at the McD's on the turnpike between OKC and Tulsa?


They vary more than you think.

[NativeOkie]

Speaking to a friend today on Capital hill, he believes this is an effort to quiet the growing momentum of new drilling. It was making sense and gaining traction.

Who would want that? OPEC they don't want their biggest addict to become energy independent.
Prevailing thought is after January prices will start creeping up.

[Chicken In The Rough]

Industry insiders keep saying that prices will rebound after January, and that mid-year 2009, we'll see $100/barrel again. But, I don't see it, and I don't understand how they derive their figures. Is it just wishful thinking?

China is struggling to avoid a recession. Europe, North America, and Japan are already there and haven't bottomed out yet. As China slides, oil prices will continue to decline in my opinion. I'm not sure we'll see $25/barrel, but I don't think we've seen the lowest prices yet.

OPEC is not willing to cut production because their economies need the cash flow. Saudi Arabia, Iran, Nigeria, Venezuela, etc. need the cash to satisfy their exploding and increasingly politically uneasy populations.

We've had this discussion before, but this is a result, once again, of supply and demand. The falling price is primarily due to our market system. As demand falls, prices also fall. The speculators and traders see declining demand (or at least dramatically slowed growth) in the near future. As a result, they are pushing prices down.

One result of declining prices that is probably most difficult for us to handle is that the majority of people outside of the oil states are cheering this decline. They don't care if the price goes to $10. The media has pounded big oil profits into everyone's heads for the last couple years. As far as most are concerned, big oil is getting its just desserts.

Oil prices this low are, of course, damaging to the oil industry. But they are also crushing the alternative energy industries that we've been pushing so hard to develop. They will also kill mass-transit and encourage urban sprawl. They will also drain governmental coffers as the tax base is reduced.

Just as $140/barrel is damaging, so is $25. Why can't we just get to a moderate and sustainable price level?

[bombermwc]

It's the same crap we always hear about oil. How many times did we heard them saying it was going to get to $5 a gallon? It would go up and then down and then as soon as it went up again, $5. Now we see the same panic folks saying it's going to bottom out.

It's just not going to happen folks. The only way it would get that low is if we totally changed the way we drive...and that hasn't changed enough. Plus, SUV sales are already up again with the dip we're currently in. You don't think they are going to be figured into an impact? A short 2 years of higher prices isn't going to amount to a hill of beans in another 5 years when we go through the same crap all over again.

It's a price that's determined by people in the futures market, so it will always violently fluxuate without any REAL reason. So, for any forseeable future, prepare to still be screwed over every time you gas up.

[OKCMallen]

Natural gas prices are more important than oil prices for our local companies, guys. Pray for a very cold winter. A stat came out yesterday saying we were under-supplied a bit compared to expectations on natural gas, so that should have helped bu the "we're in a recession" announcement this week is dropping everything.

[lasomeday]

Yeah, most companies in Oklahoma are now based around natural gas. It will go back up in the winter. It is cyclical. I think Oklahoma will do better than most of the nation because we have been conservative and our home values didn't double in value like Florida and California.

I just don't like that we have to pay for everyone else's mistakes.

[BDP]

Oil was overvalued to begin with. $45/barrel ain't bad really...

Yep. Same with housing prices. This isn't a bust as much as it is coming back to reality. The drops are not being caused by the media, the media is just mislabeling them.

Most people have very short attention spans and little patience. The media simply caters to that mentality. It's not so much that things are bad, it's that what was good about it all 6 months ago wasn't based on any sustainable conditions.

What's funny is no one EVER reports a boom as bad or irresponsible, but half the people label a return to sanity as a bust or downturn. Simply draw your time lines out a little bit further and today looks a little bit more rational and 6 months ago resembles something closer to panic than today does.

Oklahoma is the perfect example. We didn't have a housing boom, so we don't have a bust. Pick your poison: slow controlled growth or erratic fluctuations where, if you do it right you win millions, if you do it wrong you lose millions.

As long as Oklahoma stays prudent and continues to invest in itself through the slower times, we will be better prepared to take advantage of growth in the future than we ever have been.

[Deli Head]

You said it, BDP! Considering the facts and alternatives, you could argue that OKC is in an enviable position. There will no doubtedly be some winners that emerge from the rubble when this is all over. If we play our cards right, we've got a great shot at becoming even stronger. Turn off the mind-sucking tube, stay prudent & support our local economy as much as possible. It's time to obey our parents & grandparents and show our children the way.

[adaniel]

I sincerely hope that our local economy is diversified enough to handle this. Things will not be pretty if not. Analysts at MorganStanley are predicting $25/bbl oil. That is about $120 BELOW its JULY high.

Bloomberg.com: Worldwide

Goldman Sachs predicted oil prices at $200/bbl by 2009 in July....these people couldn't predict the color of the sky.

I recently accepted a full time postion with a small oil land and regualtory firm and our business is fine. Most land companies like ours have seen a dip in business but nothing dramatic so long as they planned right. Engineers, technical workers, and most midstream operations are fine. Drilling operations are starting to take a hit though. The Permian area of Texas (where drilling has been mostly for oil) has seen a really significant pullback here lately.

I can speak from personal experience that hiring in the oil and gas sector has slowed tremendously, with several large companies including a few in OKC are trimming their hiring to decade lows. But just today the economy shed 535,000 jobs nationwide. The fact that any sector is hiring albeit very slowy is something to marvel at IMO.

I would say that if oi prices are this depressed through the middle of 2009, be worried. However, oil prices usually bottom out in Decmeber and January, and I think the worst of the economic doldrums will be over by this spring, so expect oil to go up sooner rather than later.

[TaoMaas]

I would say that if oil prices are this depressed through the middle of 2009, be worried.

I'm not convinced that we would need to worry even if prices stay depressed for a while. Folks may not be spending as much money on gas, but it's a pretty safe bet that they won't be opening up savings accounts with the money they're not spending on gas. More than likely, they'll spend the extra cash on SOMETHING, which means the dollars will still be circulating in the economy...there just may be a smaller portion of the overall amount going to oil companies.

[proud2Bsooner]

Iran can't survive with low oil prices for very long. Their economy will literally collapse. Expect them to make some noise, either through sponsorship of terror attacks or threats with Israel in an effort to create instability with oil markets. Mark it down.

[Midtowner]

I say $45/barrel ain't bad.

That's true for the most part, but for companies like CHK, I worry. The way they were out there paying ridiculous sums for leases, unless they've got the cash to continue operations, they're screwed, at least in the short term. Their stock is back down to 11, btw.

[mecarr]

I say $45/barrel ain't bad.

That's true for the most part, but for companies like CHK, I worry. The way they were out there paying ridiculous sums for leases, unless they've got the cash to continue operations, they're screwed, at least in the short term. Their stock is back down to 11, btw.

I've talked with at Devon that says a healthy, stable price for oil is around $80 a barrel. Where the price of oil goes from here is uncertain, as much of it depends on how the economy does in other coutnries around the world, especially China. My feeling is that the economy will get worse, and hopefully things will begin to turn by summer.

[Kerry]

I've talked with at Devon [employee] that says a healthy, stable price for oil is around $80 a barrel.

I sell pet rocks and I think $45 is a healthy, stable price for pet rocks. I consume gasoline and I think the healthy stable price for oil is $25 per bbl.

BTW, Prepare for the collapse of Iran, Valenzuela, Saudi Arabia, and Dubai. Three of the four have a majority of their population dependent on high priced oil and the other derives about 80% of their economy from the housing and construction market (the remaining 20% is from finance and oil related companies in the region).

Start brushing up on the history of the Dark Ages. History is about to repeat itself.

[dismayed]

I sell pet rocks and I think $45 is a healthy, stable price for pet rocks. I consume gasoline and I think the healthy stable price for oil is $25 per bbl.

BTW, Prepare for the collapse of Iran, Valenzuela, Saudi Arabia, and Dubai. Three of the four have a majority of their population dependent on high priced oil and the other derives about 80% of their economy from the housing and construction market (the remaining 20% is from finance and oil related companies in the region).

Start brushing up on the history of the Dark Ages. History is about to repeat itself.

Interesting that you said this a few weeks ago. This is exactly what is now becoming apparent in Dubai. Between the fall in oil prices and the fact that almost all of their shiny new hotels were built on cheap credit, Dubai is looking at a pretty rough year next year.

[Kerry]

Interesting that you said this a few weeks ago. This is exactly what is now becoming apparent in Dubai. Between the fall in oil prices and the fact that almost all of their shiny new hotels were built on cheap credit, Dubai is looking at a pretty rough year next year.

I am also sensing some powerball numbers if anyone is interested.

[metro]

Wow, long time no hear from Theo Walcott. The price falling so low already is worrying me, alot of insiders were saying $60 p/b was the tipping point to where it could start hurting the local economy, I pray it doesn't go any lower, but as pointed out, it may get in the $20's.

I agree with betts, most of this is fear mongering lead by the media, Rovism at it's finest. Feed the public long enough and they will believe what they hear, regardless if it is completely true. Feed them enough fear and they'll buy into it and act upon it like we see people doing now. If everyone would just keep spending their money like they normally do, money would be flowing through the economy like normal. Quit buying into the media folks! I even talked to the editors at a local tv station this morning about this. They are hyping up the fear and panic!

[wsucougz]

If everyone would just keep spending their money like they normally do, money would be flowing through the economy like normal. Quit buying into the media folks! I even talked to the editors at a local tv station this morning about this. They are hyping up the fear and panic!

The economy was being pushed along by credit cards and home equity loans. Nearly 1/4 of all U.S. homeowners are now underwater on their morgages. Going along spending money like we normally do would require financial institutions to keep loaning money like they normally do, and that isn't going to happen. People who make $35k simply can't afford a $200k house, 325i and $250 jeans.

This is not just some media generated panic - it's the real deal. Look at the manufacturing, jobs and retail reports. The numbers are horrible and rapidly deteriorating. We're due for a massive, painful contraction and it's all based on economics.

[metro]

wsucougz, I agree with you also. I think we are both right. The ultimate thing that matters is what you mentioned, no one is lending money like they were. No more $35K millionaires in Dallas and LA. WE here in OKC though weren't living as stupid as the rest of the country and not much if any speculation building was really taking place, and our housing prices weren't really inflated since we've been nurturing slow, steady growth. I still believe if we spent with local companies and didn't hold money on hand in fear, our economy locally would be even better than it is, although I do agree, because of some national trends, we are and will continue to pay the price. I DO think the media hype is contributing to making the situation worse than it has to be. As the poster above pointed out, the public tends to follow the media's Rovism.