Gas Prices

"Cherry_man1" (Cherry_man1) 02/05/2016 at 20:16 • Filed to: Gas Prices

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I love them here.

Blondude > Cherry_man1 02/05/2016 at 20:20

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what the fuck

Cherry_man1 > Blondude 02/05/2016 at 20:23

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I’m in southern Missouri.

Sportwägen, Driver Of The Red Sportwagen > Cherry_man1 02/05/2016 at 20:27

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Same here in Edmond, OK

Cherry_man1 > Sportwägen, Driver Of The Red Sportwagen 02/05/2016 at 20:31

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hot damn!

Sportwägen, Driver Of The Red Sportwagen > Cherry_man1 02/05/2016 at 20:33

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The sad part is that a lot of the big oil/gas companies are laying a ton of people off :( oil is a big part of the state economy

Cherry_man1 > Sportwägen, Driver Of The Red Sportwagen 02/05/2016 at 20:49

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I can imagine, prices go down people get cut.

Gone > Sportwägen, Driver Of The Red Sportwagen 02/05/2016 at 21:52

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This sounded more harsh than I meant it to. Seriously, do enjoy it. Drive all the things all the time.

Enjoy it while you can because it can all go sideways quickly. The complete implosion of future oilfield investment will probably cause future pain. From the US side there’s a ton of DUC wells but they won’t come online quickly. And shut-in wells don’t always come back - a lot of them that have been won’t or it won’t be worth the investment. Add in the fact there’s no easy way to finance anything oil related now (ie well startup), theres damn near no more field guys (and all that experience), and there will be a noticeable lag when the market swings. Somewhere near $1T, yes trillion, in future investments has been shelved or cancelled. This all assumes that the current status is constant. Massive Iranian investment/supply, Iran and KSA playing nice (or not), what is Russia doing, etc. Geopolitics will be the deciding factor one way or another.

Oversupply is only in the 1-2% range, so all the excess will get chewed through quickly.

The industry would be happy to have oil right in the $70-80 range with gas in the $2.5-2.75 range (TX prices, its $1.45 or so here now). And I think that’d be okay by consumers too.

Wrong Wheel Drive (41%) > Cherry_man1 02/05/2016 at 22:08

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How long until we see gas under $1 per gallon??

Sportwägen, Driver Of The Red Sportwagen > Gone 02/05/2016 at 22:42

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I understand all of this, and it is why I’m trying to convince my dad to get quite a few 55 gallons drums of diesel and store them in our shed...

What I’m worried about is that Iran is going to flood the market with cheap oil, causing the oil industry in the US to shut down completely :( thus crashing our economy

Cherry_man1 > Wrong Wheel Drive (41%) 02/05/2016 at 22:47

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2-3 months maybe

LOREM IPSUM > Cherry_man1 02/05/2016 at 23:26

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I paid $100.9 a liter earlier today and thought I was doing good. Fml

Cherry_man1 > LOREM IPSUM 02/05/2016 at 23:28

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What’s the currency?

LOREM IPSUM > Cherry_man1 02/05/2016 at 23:30

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Canadian. Think we’re About 75 cents to the US dollar. (That was one dollar and nine tenths per liter, not a hundred bucks per)

Cherry_man1 > LOREM IPSUM 02/05/2016 at 23:31

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Oh I was like dafaq when I saw that

shop-teacher > Cherry_man1 02/05/2016 at 23:32

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I was stunned to pay $1.39 today. It’s like being transported to 15 years ago. I’m enjoying it while it lasts, because it sure as hell won’t.

Gone > Sportwägen, Driver Of The Red Sportwagen 02/05/2016 at 23:33

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Reply was really more directed at the OP. Whoops.

Nah, the majors will be fine. It’ll be service companies and the smaller companies that will suffer.

A lot of frac companies will bite it though. Lots are way way over leveraged. Hundreds of billions in loans won’t be paid back and frac spreads are going for pennies on the dollar. Iron is cold stacked everywhere. Lots of companies weren’t drilling economically feasible wells even at $120/bbl. Not all shale plays made real money. Cheap money was responsible for a lot of that. Can’t be viable if you’re drilling 2 new holes to hopefully pay for the last one.

It’s like the 80s, but probably worse. Some companies realize they’ll have to eat shit for the next year or so but want to hang onto talent for the future. It’s more of a problem of keeping investors happy (reducing dividends, share buybacks, etc)...and the banks. Lots of loan and finance restructuring.

Iran’s fields and developments are way under-invested due to sanctions. They have a bunch of floating storage they’re offloading (and they’ve already been selling a decent amount to other countries for years). Even with the billions of investing and majors coming in, it’ll take time (12months at least) for them to come online.

But yea, short term our economy will suffer. Manufacturing and commodities like steel are way off...almost all because of oil. Well, and China fears to be honest.

shop-teacher > Gone 02/05/2016 at 23:34

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“The industry would be happy to have oil right in the $70-80 range with gas in the $2.5-2.75 range (TX prices, its $1.45 or so here now). And I think that’d be okay by consumers too.”

Indeed, I could be quite happy with that. I’m enjoying cheap fuel prices while they last, but I’m sure our oil workers are all feeling the pain.

Gone > shop-teacher 02/06/2016 at 08:20

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Not just the pain of being laid off. My company is half the size it was. I’ve survived four rounds but cannot fathom surviving a fifth. My wife survived five at her place, but not the sixth. Fortunately she was able to find an internal position so it didn’t affect us too badly. But as the end of Q1 appears we’re both on the chopping block again. Lots of families and relationships strained and people putting major life events on hold in the last 18months. And we’ve had it insanely easy compared to those the have lost their jobs - 50k+ in Houston alone directly due to oil. And the 3.5x multiplier as it spreads to other industries so it’s hard on others as well.

I can’t imagine being in HS or college (or recent grads!!) and wanting to get into this industry. We’re bound to have another lost decade/15yrs and all the crew change experience that will forever be gone.

Anyhow, that oil price would bring stability to the sector. A lot of frac, most GoM - including deep water, and all the stripper wells are economically viable in that range. Normal (not cheap money) investment would return, hiring would resume, and growth would occur at a normal pace.

FYI, this was not to be read as a whine-fest, so hoping it didn’t come across that way.

shop-teacher > Gone 02/06/2016 at 16:14

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No, it didn’t come across that way at all. Very educational actually. My grandfather worked in the industry for 70 years (both for majors and small companies), so I’m always interested in learning about it. I wish you the best.