Dirt,
Excellent advise. As one who lost EVERYTHING in 86 , including relationships and had to move out of state with all my belongings in a car.... I can look back and say that I recovered from the total ruin. What still remains with me is the memories of day in day out worry and wait. YEARS of not knowing if today was your last day while you watched damn near all of your friends lose everything ... Was brutal. The psychological stress was the worst thing I've ever had to face. I hope the youngers today realize that , while it will be tough and they may have to restart.... they WILL all survive and thrive. Do not let your mental self get destroyed , like we did, over some damn job.

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the O&G folks fixin to get hammered have done a not damn thing but work hard and built this energy revolution that the rest of the country is benefiting from.

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I've tried to explain this to a bunch of (very) anti-O&G folks back home. They're thrilled about the price at the pump and think it's about time oil companies lose money. What I've tried to explain to them is the CEOs and board members and big time players in oil companies will be just fine. They won't lose much; in the short term they will, but they've made millions over their lifetime and they can weather this storm. This hurts the folks working 7, 14, 21 day hitches who got a good paying job over a crappy, minimum wage one. A lot of blue collar jobs were created because of this energy boom, and those blue collar jobs will be the first to go.

I know I'm hated for what I do for a profession and I'm okay with that. But it does get tiresome to hear people ***** about oil companies and all of the production they do, and then rejoice when that production has lowered their price at the pump.

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To be fair, there was a lot of arrogance coming out of the o&g labor pool during the run up. Cries of "f yeah 100 a barrel. My bonus is going to rock. If you don't like it you should buy some stock"

Granted it was mostly from the young kids that hadn't seen a real crash beffort and figured that everything was going to stay sunshine and puppy dogs for ever.

^

That is a big pool of people. All we see is you two.

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I'm not thrilled about the job cuts. I'm not thrilled people are losing their jobs, and I hope it isn't as bad as predicted.

BUT, it is needed. There was a great quote from Krauthammer last week about the situation. He said, "whenever you take away someone's money supply they are going to get angry, and look to point the finger at anyone but themself."

How do you quantify "hard working "? Sounds like beltway sounds good talk.

Also, like DS said, how can you call someone out for saying they "called" the drop in oil when the entire premise of the thread was predicting the impact of the drop of oil on Houston's economy.

Reading through this it's clear who are the people that work in O&G, and those that don't.

Might as well relabel it "Pity us: Houston, we have a problem" and limit it to the engineers to commiserate about market conditions.

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What exactly were you expecting when you posted a childish "I told you so" in regards to something that anyone with a brain could see was already happening (when you supposedly called it)? I'm not sure if we're supposed to applaud or point out that financial analysts will be negatively impacted by this too. Just like everyone else in the industry no matter if they are in O&G or not.

You make it sound like those of us in O&G are bad people who deserve this turn down. Explain to me what job I should take to avoid it? My undergrad is Architecture. I went through the 08-12 development down turn just like O&G. I got to watch 4 rounds of layoffs at my firm while O&G recovered much quicker than our sector.

I got a professional MBA during that recession and jumped to O&G project management. So construction and development is out because it gets hit harder and longer during O&G down turns. I guess I could try financials as an analyst, but that industry got hit the worst of all last time (and will this time too).

I guess my rant here is more of a why the hell would anyone think this is a good thing, let alone gloat about it? Every industry will be impacted and we're all going to suffer. The worst part is there isn't much any of us can do about it. The sad part is watching those in other industries think not only they won't be affected, but it is a good thing.

48.24 and dropping... (for when we look back in a few months and re-read this...)

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Excellent post. Regarding textiles and the national perceptions... One of the things I'll never forget/forgive was the massive hue and cry over damn yankee auto workers and other yankee trash losing their jobs prior to our crash. Every evening on the 3 news casts there was some sob story over some yankee town or Yankee family hurt by those evil jap cars. Yes it was tragic when some union slug lost his $25/hr job glueing in rearview mirrors with 17 weeks vacation etc.... Of course the Congress rushed thru all sorts of save the Yankee legislation .... Fast forward when 250,000 Texans lost their jobs...... Chirp chirp chirp.... No one gave a damn cause it was those evil oil folks and we love our $.75 gal gas.

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Yes sir, you are correct about the auto industry and hue and cry on the national level. Most folks do not realize the amount of jobs across the US that were lost when Textiles were "offshored" wholesale. The real reason behind this being allowed to happen was that the Textile/Apparel industries never could form a strong coalition to really publicly fight it, too much infighting, and the big retailers became a powerful lobby with supposed service industry expansion and growth as the mantra to save everything. Construction and other segments joined along.

All one has to do is ride around the rural Southeast and the empty buildings are apparent, in droves. Just here in Texas probably 150K or more jobs were lost. But they were mainly immigrant Latino women who earned probably 15-20% above minimum wage so the public perception was nill.

In Texas there will be a dirge about the O&G situation, but in most other states there will be euphoria about the lower fuel prices and in general this will help the US somewhat, but the reality is that the extra disposable income will likely go towards purchasing goods made in other countries and or towards service industry type business. Good, I guess, but these lower prices will not help the economy like many believe. At least that is my opinion.

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In Texas there will be a dirge about the O&G situation, but in most other states there will be euphoria about the lower fuel prices and in general this will help the US somewhat, but the reality is that the extra disposable income will likely go towards purchasing goods made in other countries and or towards service industry type business. Good, I guess, but these lower prices will not help the economy like many believe. At least that is my opinion.

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You're spot on. O&G hurts more states than just Texas this time around so there will be more people feeling it. I also think this "recovery" is bull-hockey and we won't see as big of a bump in consumer goods/airlines/etc. that so many analysts are forecasting.

I agree. I also think the reality that O&G is a key driver to the US economy is going to be a huge shock to the young hipsters. I'm sure they'll just blame O&G for the downturn instead of admitting it though since it doesn't fit their agenda.

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The Original AG 76 is spot on in his original post.

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Thanks. I wish to hell that I was 100% wrong back in Sept but It doesn't appear that way.
I'm still hoping that it doesn't develop into an 80's bust but a LOT more prognosticators are beginning to line up on the 80's scenario.

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You have been right on this great thread you created. I'm not worried that this is an 80's bust.We won't see a 20 year period of relatively low oil prices like we saw back then. But I also don't think we will see a 6 month rebound to $70 either. My prediction is we see traders move oil lower for the next month or so, then oil rises back to $50 before June. And trades in that area for the next 24 months. By that time supply will have dropped to balance out with demand. So after 24 months we will see a rise to $60 in the next 12 months. After that it will be a steady 5% increase (except that oil prices never move steady LOL) for the forseeable future.

In short, get used to $50 oil for 2015 and 2016 is my guess.

How did the rest of the country do in the 80s when oil went bust?

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In short, get used to $50 oil for 2015 and 2016 is my guess.

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if so, then Houston is in for a huge problem. Not sure its 1980's, but it won't be far off. The big difference is this time the hurt in the financial sector will not be just Texas based. Lots of pain to spread around including on Wall Street (maybe especially on Wall Street).

My opinion - Without a global recession, prices will recover around and above 60 in 2015. US and other Non-opec tight oil production growth will slow and be felt towards the end of 2015. I don't think oil prices will have recovered enough by the end of 2015 which will affect CAPEX budgets for 2016. Demand growth will end up outpacing supply growth heading into and during 2016. Unless opec opens their surplus, and I would not be surprised to see a full recovery to 2010-2014 prices during 2016.

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How did the rest of the country do in the 80s when oil went bust?

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More than 1000 banks failed.

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How did the rest of the country do in the 80s when oil went bust?

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More than 1000 banks failed.

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That was the s&l crisis. O&g was only a small portion of the reason behind the crisis

Louisiana took it hard as well. Lafayette's downtown was a major oil center and became a ghost town - they've become more tourism oriented.

$47.77 and falling.

An interesting article published by The Economist in 1987:

America's oil producers in decline

It talks about how the crash affected oil service companies and particularly about the merger of Baker International and Hughes Tools... Sound familiar?

I think there is a silver lining though. During the 80's interest rates on treasury bonds were around 7% so it was tough for O&G companies to compete with that type of ROR. Today treasury rates are around 2% so even with reduced returns, O&G can still be attractive to investors. As long as the money keeps flowing, O&G will get a haircut but should not experience a full blown 80's style bust.

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How did the rest of the country do in the 80s when oil went bust?

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More than 1000 banks failed.

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That was the s&l crisis. O&g was only a small portion of the reason behind the crisis

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Duncan I was in the banking business at that time (still am for that matter) and yes banks were failing left and right. The S&L industry disappeared. OCC, FDIC and the state closed banks on thursdays back then. Every thursday you'd pull up to work and hope not to see black cars sitting there waiting for you.

In the 80's roughly 1500 FDIC insured banks and 1200 FSLIC insured S&Ls failed.

And his question was how did the rest of the country do when oil busted, not was oil the cause of the rest of the country's woes.

Halliburton had their first round of layoffs today. Haven't yet heard of how many in total, only a handful in our group.

I thought they announced 1,000...but I could be misremembering.

my first job when I got out of A&M was working for one of the "Big 8" accounting firms in their banking section. I spent four years travelling around South Texas auditing our client banks - over half of which were operating under cease and desist orders from the OCC or the FDIC. Interesting times, but great credit training. I've pretty much seen it all and that's why I'm very concerned about what is possibly going to happen in Texas if these prices stay low for 18-24 months.

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I thought they announced 1,000...but I could be misremembering.

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The 1,000 jobs announced were Eastern hemisphere. They were announced on the same day they were let go. The layoffs today were jobs here in Houston.

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Halliburton had their first round of layoffs today. Haven't yet heard of how many in total, only a handful in our group.

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If you don't mind sharing, which group are you with...or which groups were affected?

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my first job when I got out of A&M was working for one of the "Big 8" accounting firms in their banking section. I spent four years travelling around South Texas auditing our client banks - over half of which were operating under cease and desist orders from the OCC or the FDIC. Interesting times, but great credit training. I've pretty much seen it all and that's why I'm very concerned about what is possibly going to happen in Texas if these prices stay low for 18-24 months.

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Those were the days. Memorandums of understandings and cease and desist orders. The best was 23 year old bank examiners talking to bank presidents like they were idiots.

You are forgetting the shorts my friend....

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Halliburton had their first round of layoffs today. Haven't yet heard of how many in total, only a handful in our group.

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If you don't mind sharing, which group are you with...or which groups were affected?

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I am in supply chain and only know of a few in our group. However, I have a friend in HR who informed me there were many more company wide today.

What does this mean for natural gas, processing facilities, and other downstream consumers?

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my first job when I got out of A&M was working for one of the "Big 8" accounting firms in their banking section. I spent four years travelling around South Texas auditing our client banks - over half of which were operating under cease and desist orders from the OCC or the FDIC. Interesting times, but great credit training. I've pretty much seen it all and that's why I'm very concerned about what is possibly going to happen in Texas if these prices stay low for 18-24 months.

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Those were the days. Memorandums of understandings and cease and desist orders. The best was 23 year old bank examiners talking to bank presidents like they were idiots.

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Ha Ha - you can add 22yr old CPA's to the list!

I wish I could remember all the crappy loan files I looked at over those years. Some of the failed S&L loans I looked at really should have resulted in someone going to jail. There is no way they were done at arms length - someone got rich on the deal. But others were just people speculating on land and getting caught in the downturn.

I love rereading this thread. Lots of good info and lots of opinions, some right and several wrong. Thanks for starting this thread - blue star is for you!