Are US Oil & Gas Industries “Back & Expanding”?
During a visit to Midland in Texas for a fundraising event, Trump made certain remarks in his speech addressing the people of that West Texas region which is the heart of oil reserves. Trump in his speech said, “Now we're back and now we're just going to keep expanding. We did a great job." This was about the oil and gas industries bouncing back after suffering major setbacks in the past year.
A report released by Baker Hughes paints a different picture. While there were 942 active drilling rigs last year, this year sees a significant drop to just about 251 drilling rigs being active. Especially in West Texas, the price of an oil barrel dropped from $63 of January 2020 to below zero by April 2020. Later, although the price picked up to $41, it is still very low compared to the standard US benchmark. Domestic crude production is down by 2 million barrels per day compared to that of January 2020.
The pandemic forced people to cut back on traveling and as a result of extremely lower demand, both the oil and gas industries suffered lower prices directly leading to the bankruptcy of
An energy markets expert, Phillip Verleger claimed, “this industry is going to shrink and shrink dramatically unless world prices rise” in an interview to CNN.
Haynes and Boone, in their report, said that 18 oil and gas produces have filed for bankruptcy, the second-highest quarterly increase in the past 5 years.
Bill Gilmer, the Director for Institute for Regional Forecasting at the University of Houston said, “To say he’s back, yeah, that’s an exaggeration for sure.”
Both oil and gas industries are seeing layoffs, bankruptcies at a large scale and it is highly unlikely for the industries to regain their foothold of pre-pandemic times any time soon.