Gas Prices

[redman242]

Originally Posted by thathottnurse

I feel for the oil workers right now a lot. Its a very scary situation to be in.

Does that mean that you will be running a half price special for oilfield workers?

[TinMan]

That's the sad truth of it, THN. The small business owners and hourly workers will take the brunt of the pain with this downturn. Even if it doesn't last long, folks who don't have a lot socked away can ill afford any disruption to their income.

$60 oil is not so bad. Most experts say that the industry can adjust to that level and still see some modest growth, and the general economy benefits. $40 oil is gonna hurt, if it gets to that level and stays there.

[Guest092216]

Originally Posted by redman242

Does that mean that you will be running a half price special for oilfield workers?

When hard times hit, women have to give up shopping and men have to give up pussy. Lol

Sucks but if you are looking for discounted trim because finances are tight then you should probably save the money for something else you might need down the road. Its always during hardships that the car breaks down or fridge goes out.

[Texas Contrarian]

A lot of people I consider to be some of the state's smartest energy analysts have been scrambling to figure out what import all this has for both the DFW-area and Houston-area economies (significantly more for the Houston area, in all likelihood).

Weighed against the fact that a big decline in gasoline prices is inarguably a very good thing for millions of consumers is the prolonged damage likely to be suffered by the oil & gas industry.

Here's an interesting observation that's been made by a number of observers:

Up to a point, the price decline is probably a net benefit for the area economy, but at some level, deformation and disruption of the energy industry outweighs the lower price's relief to household budgets.

At what point? That's what the argument centers around. The essence of it is that the aggregate value of increased benefits to consumers arising from falling prices is fairly linear, whereas the damage to the energy industry (and lenders thereto) much more powerfully resembles an exponential function. So the key question is essentially where the "curves cross."

I would also suggest that comparisons to the late '80s Texas recession are only partly apt, since a lot more than just an oil price collapse was involved. After a series of events, including tax law changes in 1986 that kicked out huge tax breaks for affluent investors, the value of commercial real estate portfolios collapsed -- taking down almost every major banking institution in the state. It was a real nightmare!

I recall that in (or about) 1983, InterFirst (a large Dallas bank) announced that it had to write down about $300 million of energy loans, somewhat panicking the local economy (even though this happened long before the worst of the storm). Not long thereafter, several senior executives of competing banks made statements along the following lines: "No, we didn't load up our balance sheets with all those risky energy energy loans. No way. We concentrated on commercial real estate."

(Oops!)

[TinMan]

I lived through all that, CM. The only major bank to survive was Frost. All the others failed, or sold out before they had a chance to fail. That created a huge credit crunch that we aren't likely to see again now that the region is dominated by banks with national footprints.

The wide use of energy hedging, which also didn't exist back then, is another factor that ought to soften the blow.

It's gonna hurt, but it shouldn't be near as bad as what we saw 30 years ago, for a number of reasons.