West Texas Intermediate is crashing and it was in the 20's .....What does this mean for Texas?Could it be a bust??? (Houston: 2014)

[C24L]

Oil crashed and saw its biggest one-day drop since 1991.What do y'all think this means for Texas.I know that Midland/Odessa and Houston will be very negatively impacted if this continues.I heard that hundreds of billions of debt taken out by the shale players is going to come due in the next few years.Do you think the Texas oil and gas industry is headed towards a bust???Time will only tell.::

[Bitey]

Russia and Saudi Arabia have decided to have an oil-pissing contest. That will cause a problem for marginal producers/fields and some heartburn for the industry in general, but it's a short-term situation. Market volatility is nothing new and the industry will continue to endure long-term.

[KathrynAragon]

I feel like it is a short term situation but will have some short term repurcussions. I am expecting my husband to get laid off temporarily but to go back to work in a few months for example.

[Trainwreck20]

*shrug* Who knows? That is always the case. It could be very short, it could last a long time. To be honest, oil companies know that this can happen at any time. The Saudis and the Russians have a lot of control over this and that is just the nature of the business.

At the end of the day, the big winner will be the Chinese .

[texasdiver]

Originally Posted by C24L

Do you think the Texas oil and gas industry is headed towards a bust???

Yes, probably. Especially if combined with an overdue coronavirus-triggered recession.

But of course no one really knows.

[LocalPlanner]

Texas has two different economies: Houston and the Permian area (you could throw Tyler/Longview into that as well) and most of the rest of the state, especially the I-35 Corridor.

The I-35 Corridor will just track the nation. Sitting here in Houston, I'm jealous of DFW.

Houston and the Permian may have a very bad year. A number of independent shale players may bite the dust, since their capital sources had already dried up pre-COVID19, because they weren't turning a profit. I expect upstream O&G-related manufacturing to have big layoffs. I'm sure a reduction in jobs in the field (mostly Permian). There was already an expectation of white-collar job loss in Houston in 2020, so the price crash will just magnify that.

[C24L]

oil dropped into the 20's today.....cant be good for the shale plays and Midland/Houston

[tcualum]

My husband is trying to avoid layoffs as long as possible but we are afraid that they will be inevitable. He and his business partner are making plans to move as many employees as possible to remote work but that's going to be difficult given the nature of the company (oilfield tools manufacture and support). We've personally saved a lot of money in cash so we can weather the storm personally but it will be very stressful. We always stress to new people entering the industry to save as much money as possible because of the boom/bust cycle but most don't listen when there's a boom.

[LocalPlanner]

Of course it's likely that the price will return to a level where some companies can make some money. But it's likely that there will be a pretty good shakeout (bankruptcies, firm dissolutions, consolidations) if that doesn't happen within a very few months - and Russia seems to be willing to hold out. Russia seems as motivated by the desire to smash the U.S. oil industry as it is to stand up to SA.

Of course the industry will have some type of recovery eventually, but because of the poor financial shape of so many companies going into this episode, I have to think it's going to be shrunken. It will stabilize at fewer firms and fewer jobs, and lower economic output in TX.

While there's going to be layoffs, and maybe substantial ones in a non-very-short-term scenario, but at least the firms were already running leaner than they were in 2014, so there's less fat to cut.