We hit rock bottom and are starting to recover, says Gas Buddy petroleum analyst Patrick DeHann of the oil and gas industry, but the mood is not optimistic. The U.S. industry was destined for a down year caused by OPEC and Russia flooding the market as 2020 got underway, before a novel coronavirus showed up, but the devastation this year is unprecedented, and the lingering impact of continuing infections is causing another drop in demand as late summer vacation plans are terminated.
The glass is half empty and half full. As jobs and incomes and bank accounts have shriveled, the cost of gas is a bright spot. “Average oil prices in Houston have dropped in the past week, about two cents a gallon. They’re at $1.82, still a far cry from last year when we were paying $2.49 in Houston,” says DeHann.
But then there’s jobs. The Dallas Fed had predicted a loss of close to ten thousand jobs in 2020 before Covid 19. They’ve updated that figure to one million, each of those representing a household, a family, a livelihood, a career, halted, painfully. Oil prices had initially gone into negative territory in early stages of virus lockdowns, but have bounced back. “Right around $41 dollars a barrel. Oil prices really haven’t been able to break above that level simply because the resurgence of Covid 19 cases across the US is now slowing down the recovery in oil demand,” says DeHann. 60% of U.S. oil industry bankruptcies through May were in Texas.
Add to that the global tensions. Russia and OPEC are more motivated than ever to manipulate markets to keep the U.S. on the sidelines as much as possible, and escalating tensions with China have drastic potential economic impacts that DeHann says will hurt both country’s economies, and with them the worlds’. Just when you thought things couldn’t get worse.
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