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Democrat
Colorado Springs, CO
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Yes, I would agree it is a good thing for the average consumer, but with the shale boom, there are a lot of US companies that depend on a certain margin to stay afloat. One of the main complaints by the Right over the last few decades was the dependency on foreign oil, but the shale boom has all but ended that. Now, we may be beholden to the Saudis again, if they get their way. In the oil patch here in Texas, my brother just survived an 80% layoff in oil field workers, because the drilling has basically ceased. His company is not the exception. There is the beginning of a real depression here in Texas now, due to the large influx of people who moved here for an oil job, and are now out of work. For-sale signs have sprung up all over my neighborhood. The oil economy was a large factor in the job growth over the past few years, one of the major bright spots in the country, and now that's dying a hard and brutal death.
What benefits Russian oil producers benefits us in this regard. We want oil and natural gas to be higher, but not due to a drop in US production (which means less jobs and money staying in the US) but due to a drop in foreign production. We need either Venezuela to plunge into civil war, Yemen's conflict to spill into Saudi Arabia, or ISIS to shut off Iraqi production. Russian oil production falling off a cliff would be great too, but they are in so deep that they might not be able to afford to stop.
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TJ Wrote: Or your brother could learn to do something else. He might consider North Dakota. The crude/shale oil is a dirty mess. Money usually rules the world so it's production will continue and not slow down. The Saudi over production has seriously helped our economy and hurt Russia at the same time. I'm sorry that your brother and others have employment problems. This country has dealt with that for a very long time with manufacturing leaving for slave labor (bigger profits for the few) but wrecked lives for so damned many people. Our next financial crunch is probably the trillion dollars of student loan debt without matching jobs to pay for it. There are problems everywhere. Totally agree the student debt is out of control and is crippling us. I was lucky enough to get out of College with minimal debt thanks to an Army Scholarship, but most people I was friends with were not so lucky, and are already 5 years behind me in the 'traditional' life steps (house, baby, etc) because what they would have used as their house payment gets sucked up into loan debt.
North Dakota is in the same boat as Texas; my father works for a different service company up there as a field service tech. They are at a standstill as well. My brother has no college degree and not much money, so his prospects are limited.
Oilfield manufacturing is one of the last major manufacturing sectors where the USA still dominates. Go to a rig in Russia, SE Asia, the Indian Ocean, Caspian Sea, the North Sea, Africa, etc, and the Oil tools are most likely made in America. No one can challenge American quality in the Oilfield yet, although China is trying. That industry is centered around Southern California and the Houston area, and is careening toward a cliff in a few months now that new drilling has dried up. Pipe fitters, welders, low level service techs, roughnecks, engineers, accountants, all of which are American (often a new immigrant) are getting laid off and trying to find work elsewhere in a weak economy.
Right now, it is estimated that for shale oil to break even in the USA, it has to be at $65 a barrel (estimated. Exxon, Chevron, Shell, etc can do it more cheaply than the mom-and-pop companies that have sprung up in the last 10 years. A lot of those are much higher 'break-even', and unfortunately the big companies are buying up the failing start ups and consolidating their hold on the market) http://finance.yahoo.com/news/why-breakeven-price-crude-oil-194354497.html. The Saudis can do it for $27 a barrel, because they import Bangladeshi workers, confiscate their passports, and don't pay them anything to work. I've been to Dubai and seen it myself. It's deplorable and the definition of slave labor.
The big companies like Exxon can weather a few years of low prices, mainly because they don't actually own any drilling rigs or operations. The Oil business is a giant web of subcontractors; At a given well, there might be one Exxon rep (called the "Company Man") to oversee the operation. The only thing Exxon owns is the mineral rights, to limit their liability. The drilling rig is owned by another company, some of the major names are Ensco, TransOcean, Diamond Drilling, Longzhu, and others. Then the workers to drill are supplied by yet another company, (Schlumberger, Halliburton, GE Oil & Gas, FMC), and so on and so forth.
What this does is allows Exxon to cut bait and basically fire all the subcontractors when the price of oil drops. Exxon gets away clean and just keeps pumping oil, while the subcontractors have no work for their people, and have to lay 1000s of people off or go bankrupt, or both.
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