Since July 2014 the price of oil has dropped an estimated 40%. Ryan Lance, ConocoPhillips’s chairman and chief executive said: “We are setting our 2015 capital budget at a level that we believe is prudent given the current environment.”
The announcement came on the heels of BP’s notice that it would cut middle management and other jobs in the months ahead.
NYT reports another wrinkle. The slow decline in drilling rigs deployed in fields worldwide means that whatever hopes Saudi Arabia and other OPEC producers have that lower prices will lead to quick production declines are unlikely to happen before late 2015. The 12 member OPEC cartel decided last month to keep production steady, accelerating the oil price drop.
While U.S. consumers may benefit to the tune of half-a-trillion dollars a year in more disposable income, oil and gas related jobs have been helpful to manufactured housing.
For example in Oklahoma, monthly energy tax revenue in November declined from the year before by more than 5 %, the first decline in two years.
Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin said: “This is what commodity markets do, they go to high price, and high price inspires new production and also inspires consumers to use less. After a couple of years of that, prices collapse. Then low prices inspire consumers to consume more and encourage suppliers to turn off production. Then you get a supply shortage and prices go back up.”
The bottom line at present seems to be that the impact of sliding crude may boost disposable income nationally for consumers. That could help manufactured home sales, and lower shipping costs of homes to markets. But the slide of crude may cost sales more closely tied to shale in ND, TX, OH, LA and OK. ##
(Photo Credit: Jim Wilson/The New York Times)
