The future of oil and gas on the world stage ! (Houston: credit, house)

[0825spring]

Originally Posted by still_waiting

Let's not argue with the pessimists anymore, let's just let them have the doom and gloom argument, then maybe they'll go away. Then again maybe not, message boards thrive when there's a bunch of Chicken Littles running around predicting doom.

Still Waiting, you're young and haven't been through the rough times in the O&G business, right? I have and it's not fun. I've had to run the numbers on how many people need to be let go when a major project gets cancelled. Then watch Team members make the long walk to the Dept Mgrs office to get their pink slips. Afterwards I immediately get on the phone to call my own global contacts...thank God for them, no burnt bridges and a good reputation.

What you are reading is not necessarily gloom and doom pessimism....just a dose of reality learned the hard way. It's a boom or bust industry. Make and save the big bucks while you can and always have a back up plan in place. There's little security or loyalty left. At the same time, I can't imagine doing anything else.

[radiolibre99]

Why would a city base its economy around that level of instability? I'm sure Houston will stay on top even if there is a dpi because its economy is pretty diverse. Oil and gas may be the biggest sector and it will hurt a lot of people but Houston can still stay afloat with other sectors.

But what is it that the doom predictors are saying? That Houston would go under if there was a bust and end the good times, or just that the o&g sector would get hurt?

[swopoe]

So what do you suggest for us families with employees in O&G? Other than update the resume and LinkedIn just in case. My husband is busy at work, but I am a nervous nelly.

[Htown2013]

How will all of this affect U.S. downstream, including Refining and Chemicals? What about Shale Gas?

[Htown2013]

Originally Posted by swopoe

So what do you suggest for us families with employees in O&G? Other than update the resume and LinkedIn just in case. My husband is busy at work, but I am a nervous nelly.

I'm hoping real estate doesn't tank, as I'm in the middle of an O&G relo for assignment.

[Zhang Fei]

Originally Posted by radiolibre99

Why would a city base its economy around that level of instability?

It's not a choice. New York City is the center of finance, fashion, media and entertainment, law, insurance, et al because of its first mover advantage and ideal geographical location (in the past) vis-a-vis the Great Lakes and Great Britain. Houston lacks these advantages.

Oil is better than gold. Compared to gold, it costs little to process and is literally found money. To reject oil because it has booms and busts is like rejecting inherited money because it will eventually run out.

Originally Posted by radiolibre99

I'm sure Houston will stay on top even if there is a dpi because its economy is pretty diverse. Oil and gas may be the biggest sector and it will hurt a lot of people but Houston can still stay afloat with other sectors.

But what is it that the doom predictors are saying? That Houston would go under if there was a bust and end the good times, or just that the o&g sector would get hurt?

Nobody's making this argument. What people are saying is that in Houston, real estate busts follow oil busts, because oil is the primary industry segment upon which Houston's other economic components feed off. Take oil to $50, and you get the real estate prices that prevailed at $50, with some adjustment for inflation.

[Jack Lance]

Originally Posted by Zhang Fei

It's not a choice. New York City is the center of finance, fashion, media and entertainment, law, insurance, et al because of its first mover advantage and ideal geographical location (in the past) vis-a-vis the Great Lakes and Great Britain. Houston lacks these advantages.

Oil is better than gold. Compared to gold, it costs little to process and is literally found money. To reject oil because it has booms and busts is like rejecting inherited money because it will eventually run out.

Nobody's making this argument. What people are saying is that in Houston, real estate busts follow oil busts, because oil is the primary industry segment upon which Houston's other economic components feed off. Take oil to $50, and you get the real estate prices that prevailed at $50, with some adjustment for inflation.

This is a ridiculously flawed statement, it supposes that Houston's real estate market is solely based on the price of oil which is patently absurd. It assumes that there is no other economic activity in Houston besides oil and gas which is of course also absurd. Houston has gone though many oil bust without a real estate bust. Only one time in Houston's history has a oil bust lead to a real estate bust and that was in the 1980's.

In 2009 oil plunged to 33$ a barrel from 140$ just a year earlier did real estate do the same? Of course not there is no way real estate prices could have those types of price swings that market is just not that agile. People need to think before they post such ill-informed nonsense as this...

[Zhang Fei]

Originally Posted by Jack Lance

In 2009 oil plunged to 33$ a barrel from 140$ just a year earlier did real estate do the same? Of course not there is no way real estate prices could have those types of price swings that market is just not that agile. People need to think before they post such ill-informed nonsense as this...

Oil prices went below $33 for exactly 4 days. They went above $140 for 7 days. Presumably no E&P investments were made based on $140 oil.

And the housing market had no chance to fall based on 3 days of $33 oil or balloon based on 7 days of $140 oil. Whereas it's had 5 years to get used to oil prices above $70.

The difference between then and now is at the time, companies had modest debt loads that reflected oil priced for much of the previous decade. Debt levels have ballooned since, presumably via investments in projects that are profitable at higher oil prices.

If oil prices stay at $50 for an extended period of time, we will find out just how big an impact the fracking revolution has had on Houston's boom.

[Jack Lance]

Originally Posted by Zhang Fei

Oil prices went below $33 for exactly 4 days. They went above $140 for 7 days. Presumably no E&P investments were made based on $140 oil.

And the housing market had no chance to fall based on 3 days of $33 oil or balloon based on 7 days of $140 oil. Whereas it's had 5 years to get used to oil prices above $70.

The difference between then and now is at the time, companies had modest debt loads that reflected oil priced for much of the previous decade. Debt levels have ballooned since, presumably via investments in projects that are profitable at higher oil prices.

If oil prices stay at $50 for an extended period of time, we will find out just how big an impact the fracking revolution has had on Houston's boom.

First of all you do not take into account the beneficial effects that lower oil prices have on other segments of the economy. Even within the O&G sector you will see upswings in profits in the refining sector due to lower prices.

Nobody is suggesting that lower oil prices will not have some ill effects on Houston's economy but to state that somehow Houston real-estate market is directly pegged to oil prices is absurd

[ipuck]

Originally Posted by Jack Lance

First of all you do not take into account the beneficial effects that lower oil prices have on other segments of the economy. Even within the O&G sector you will see upswings in profits in the refining sector due to lower prices.

Nobody is suggesting that lower oil prices will not have some ill effects on Houston's economy but to state that somehow Houston real-estate market is directly pegged to oil prices is absurd

How about use your neighbor as an indicator? Do one of you neighbor on the right or left work in O&G? If yes, how long you think your neighbor will be in that house if they are unemployed for longer than 6 months?

People are concern because it is always the future that drive the company and economy. When the future is in doubt, things are no longer normal.

I think Saudi Arabia is out to teach the guys drilling in North America a lesson for taking a piece of their pie. They will make this painful till it hurts before they start manipulating the price upward again. End game is 25-50% of the North American producers no longer drilling in North America.