{"id":38856,"date":"2014-10-14T11:50:45","date_gmt":"2014-10-14T16:50:45","guid":{"rendered":"http:\/\/stateimpact.npr.org\/texas\/?p=38856"},"modified":"2014-10-14T11:53:29","modified_gmt":"2014-10-14T16:53:29","slug":"will-low-oil-prices-rattle-the-texas-economy","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/texas\/2014\/10\/14\/will-low-oil-prices-rattle-the-texas-economy\/","title":{"rendered":"Will Low Oil Prices Rattle The Texas Economy?"},"content":{"rendered":"<div id=\"attachment_21611\"  class=\"wp-caption module image right\" style=\"max-width: 300px;\"><a class=\"fancybox\" title=\"The lead oil and gas regulator in Texas passed new rules for fracking and drilling wells today. (Photo of a Cabot natural gas drill at a fracking site in Pennsylvania.)\" href=\"http:\/\/stateimpact.npr.org\/texas\/files\/2012\/11\/81705885-1.jpg\" rel=\"\"><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-21611\" alt=\"The lead oil and gas regulator in Texas passed new rules for fracking and drilling wells today. (Photo of a Cabot natural gas drill at a fracking site in Pennsylvania.)\" src=\"http:\/\/stateimpact.npr.org\/texas\/files\/2012\/11\/81705885-1-300x225.jpg\" width=\"300\" height=\"225\" srcset=\"https:\/\/stateimpact.npr.org\/texas\/files\/2012\/11\/81705885-1-300x225.jpg 300w, https:\/\/stateimpact.npr.org\/texas\/files\/2012\/11\/81705885-1.jpg 594w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><p class=\"wp-media-credit\">Photo by MIRA OBERMAN\/AFP\/Getty Images<\/p><p class=\"wp-caption-text\">The benchmark price of oil is lower than it has been in four years.<\/p><\/div>\n<p>The benchmark price of U.S. crude hovers\u00a0<a href=\"http:\/\/www.eia.gov\/dnav\/pet\/hist\/LeafHandler.ashx?n=PET&amp;s=RCLC1&amp;f=D\" data-mce-=\"\" data-cke-saved-href=\"http:\/\/www.eia.gov\/dnav\/pet\/hist\/LeafHandler.ashx?n=PET&amp;s=RCLC1&amp;f=D\">around $85 a barrel<\/a>. That\u2019s lower than it&#8217;s been in four years and $15 below where it was a year ago. Here are a few reasons why:<\/p>\n<ul>\n<li><strong>Economic growth has stalled internationally<\/strong>\u00a0\u2013 This has slowing the demand for oil, but oil supplies are\u00a0increasing thanks to the shale boom in the U.S. and the fact that OPEC \u2013 the cartel that sets prices internationally \u2013\u00a0<a href=\"http:\/\/articles.economictimes.indiatimes.com\/2014-10-13\/news\/54970971_1_oil-prices-newedge-japan-petroleum-exporting-countries\" data-cke-saved-href=\"http:\/\/articles.economictimes.indiatimes.com\/2014-10-13\/news\/54970971_1_oil-prices-newedge-japan-petroleum-exporting-countries\">has not cut production<\/a>.<\/li>\n<li>\u00a0<strong>The dollar is strong<\/strong>\u00a0\u2013 The higher valuation of U.S. currency means that oil prices are down but \u2013because the\u00a0<a href=\"http:\/\/abcnews.go.com\/Business\/wireStory\/drop-oil-prices-squeeze-us-economy-26162224\" data-cke-saved-href=\"http:\/\/abcnews.go.com\/Business\/wireStory\/drop-oil-prices-squeeze-us-economy-26162224\">dollar\u2019s also at a four-year high<\/a>\u00a0\u2013 the oil is still pricey, driving down demand.<\/li>\n<li><strong>Speculators are betting on prices to drop<\/strong>\u00a0\u2013 Weekly production of oil is expected to reach a 45-year high next year,\u00a0<a href=\"http:\/\/www.bloomberg.com\/news\/2014-10-12\/speculators-push-oil-into-bear-market-as-supply-rises.html?hootPostID=c52d4ec78aa908b6919f81c0b6e00408\" data-cke-saved-href=\"http:\/\/www.bloomberg.com\/news\/2014-10-12\/speculators-push-oil-into-bear-market-as-supply-rises.html?hootPostID=c52d4ec78aa908b6919f81c0b6e00408\">the market\u2019s going bearish<\/a>, driving the prices down.<\/li>\n<\/ul>\n<p><img decoding=\"async\" title=\"IFrame\" alt=\"IFrame\" src=\"http:\/\/kut.org\/sites\/all\/libraries\/ckeditor\/images\/spacer.gif?t=C6HH5UF\" align=\"\" data-cke-realelement=\"%3Ciframe%20frameborder%3D%22no%22%20height%3D%22166%22%20scrolling%3D%22no%22%20src%3D%22https%3A%2F%2Fw.soundcloud.com%2Fplayer%2F%3Furl%3Dhttps%253A%2F%2Fapi.soundcloud.com%2Ftracks%2F172089180%26amp%3Bcolor%3Dff5500%26amp%3Bauto_play%3Dfalse%26amp%3Bhide_related%3Dfalse%26amp%3Bshow_comments%3Dtrue%26amp%3Bshow_user%3Dtrue%26amp%3Bshow_reposts%3Dfalse%22%20width%3D%22100%25%22%3E%3C%2Fiframe%3E\" data-cke-real-node-type=\"1\" data-cke-real-element-type=\"iframe\" data-cke-resizable=\"true\" \/><img decoding=\"async\" title=\"&lt;--break--&gt;\" alt=\"&lt;--break-&gt;\" src=\"http:\/\/kut.org\/sites\/all\/modules\/contrib\/wysiwyg\/plugins\/break\/images\/spacer.gif\" data-cke-saved-src=\"\/sites\/all\/modules\/contrib\/wysiwyg\/plugins\/break\/images\/spacer.gif\" \/>Dropping prices have already things shaken up in the business world. Mergers and acquisitions of oil companies are\u00a0<a href=\"http:\/\/fuelfix.com\/blog\/2014\/10\/10\/sinking-oil-prices-may-stifle-deals-ma-expert-says\/\" data-mce-=\"\" data-cke-saved-href=\"http:\/\/fuelfix.com\/blog\/2014\/10\/10\/sinking-oil-prices-may-stifle-deals-ma-expert-says\/\">slowing because of the uncertainty<\/a>.\u00a0 Companies in the oil-rich city of Houston are\u00a0<a href=\"http:\/\/www.houstonpublicmedia.org\/news\/falling-oil-prices-put-squeeze-on-houston-companies\/\" data-mce-=\"\" data-cke-saved-href=\"http:\/\/www.houstonpublicmedia.org\/news\/falling-oil-prices-put-squeeze-on-houston-companies\/\">expecting to take a financial hit<\/a>, and Mexico&#8217;s massive oil-hedging program has been\u00a0<a href=\"http:\/\/www.ft.com\/cms\/s\/0\/4b2361e4-509c-11e4-b73e-00144feab7de.html#axzz3G8E9Yb00\" data-mce-=\"\" data-cke-saved-href=\"http:\/\/www.ft.com\/cms\/s\/0\/4b2361e4-509c-11e4-b73e-00144feab7de.html#axzz3G8E9Yb00\">thrown into disarray.<\/a><\/p>\n<p><iframe loading=\"lazy\" width=\"100%\" height=\"166\" scrolling=\"no\" frameborder=\"no\" src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/172089180&amp;color=ff5500&amp;auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false\"><\/iframe><\/p>\n<p><!--more-->So could the low prices start impacting the Texas economy as a whole?<\/p>\n<p>&#8220;There\u2019s certainly reason to give pause,&#8221; says\u00a0<a href=\"http:\/\/bakerinstitute.org\/experts\/kenneth-b-medlock-iii\/\" data-cke-saved-href=\"http:\/\/bakerinstitute.org\/experts\/kenneth-b-medlock-iii\/\">Kenneth Medlock<\/a>\u00a0with the Center for Energy Studies at Rice University&#8217;s Baker Institute. &#8220;Texas is definitely a \u2018go as oil goes\u2019 kind of state.&#8221;<\/p>\n<p>The question, says Medlock, is &#8220;whether this is a trend that will continue in the next couple months.&#8221;<\/p>\n<p><div class=\"related-content alignleft\"><h4 class=\"related-header\">Related<\/h4><div class=\"links\"><h5>Posts<\/h5><ul><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2014\/10\/07\/rising-us-crude-oil-production-buffers-prices-from-mideast-violence\/\">Rising US Crude Oil Production Buffers Prices From Mideast Violence<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2014\/09\/26\/will-mexican-drilling-bring-texas-profit\/\">Will Mexican Drilling Bring Texas Profit?<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2014\/09\/24\/flow-of-money-from-south-texas-oil-startles-economists\/\">Flow Of Money From South Texas Oil Startles Economists<\/a><\/li><\/ul><\/div><div class=\"topics\"><h5>Topics<\/h5><p class=\"topic\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/topic\/texas-oil-and-gas\/\">Texas Oil and Gas<\/a><\/p><\/div><\/div>&#8220;By December we might be in the 60 dollar (a barrel) range,&#8221; he says. &#8220;At which point you would probably see, at the very least, some production ventures being delayed and that would weigh on the US economy.&#8221;<\/p>\n<p>The cost of\u00a0fracking\u00a0an oil well is different in different parts of the state.\u00a0<a href=\"http:\/\/www.npr.org\/2014\/10\/14\/356045110\/as-oil-prices-slide-speculation-rises-on-shale-booms-sustainability?utm_medium=RSS&amp;utm_campaign=coreyspodcast\" data-mce-=\"\" data-cke-saved-href=\"http:\/\/www.npr.org\/2014\/10\/14\/356045110\/as-oil-prices-slide-speculation-rises-on-shale-booms-sustainability?utm_medium=RSS&amp;utm_campaign=coreyspodcast\">A report Tuesday\u00a0<\/a>from NPR&#8217;s John Burnett indicated that some drillers may already be getting worried.<\/p>\n<p>&#8220;If you&#8217;re considering\u00a0fracking\u00a0a new well in South Texas, you&#8217;re thinking twice about it at $85 and you&#8217;re definitely not going to do it at $80 dollars a barrel for oil,&#8221; the Houston Chronicle&#8217;s Chris Tomlinson told Burnett.<\/p>\n<p>Still, Rice&#8217;s Medlock is careful to point out that the sky isn&#8217;t falling, he says.<\/p>\n<p>\u201cIf you look at rig counts in the Permian Basin recently, even with oil prices falling, those rig counts have been climbing,&#8221; he says.<\/p>\n<p>He says it&#8217;s just that uncertainty in China, the Middle East and other places far from the Texas\u00a0oilfields\u00a0make it hard to say exactly how long the downward trend will continue.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The benchmark price of U.S. crude hovers\u00a0around $85 a barrel. That\u2019s lower than it&#8217;s been in four years and $15 below where it was a year ago. Here are a few reasons why: Economic growth has stalled internationally\u00a0\u2013 This has slowing the demand for oil, but oil supplies are\u00a0increasing thanks to the shale boom in [&hellip;]<\/p>\n","protected":false},"author":51,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[59],"tags":[21],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/38856"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/users\/51"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/comments?post=38856"}],"version-history":[{"count":38,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/38856\/revisions"}],"predecessor-version":[{"id":38896,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/38856\/revisions\/38896"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/media?parent=38856"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/categories?post=38856"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/tags?post=38856"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}