Plummeting Oil Prices Bad for Texas Machining

Wednesday, February 04, 2015

Dropping gas prices are keeping drivers smiling. But the real impact from plummeting gas prices has everything to with dropping oil prices. Every time oil prices significantly drop for an extended period of time, production will subsequently wane.

As oil production slows, they don’t need to employ as many oil producers, such as drill workers and the like. And with oil prices having been spiking as wildly as they were when they first breached $100, but trending downward rather than up.

These oil workers are subsequently laid off. The ensuing population loss to these essential prairie towns is obviously detrimental to their barely fledgling economies, which only started taking off less than a decade ago. Many of these locations across Texas were establishing themselves beyond crash pads for transient workers, supporting new home construction revenue.

Beyond this, also disappearing is oil well and derrick building, driving not only construction, machining as well. Fortunately there was a little spike in barrel prices to $55 recently from a low of $40. But not even the savviest analyst can accurately predict how long or stable this rebound is. And with hundreds of rigs taken offline on a weekly basis across the country at the current rate, there is a lot to rebound in order to get back to where we were.