The price of oil has dropped below $75.00 per barrel. While that sounds great to all of us who are tired of paying for high gas prices. This has devastating effects on our economy. The break even price for our domestic production is around $60-64 dollars per barrel. While the break even price for Saudi and other Arab gulf states is around $40 per barrel. Earlier last month in an attempt to regain market share lost to US domestic production Saudi began discounting their oil sales below market prices. This has flooded the market both here at home and around the world. China today has the highest number of super tankers enroute to its ports with cheap Saudi oil on board. China doesnt necessarily need all that oil right now, due to their economy being in the sharpest decline in over 25 years. But they are smart to take advantage of a gluttony of cheap oil, and are set to add these new deliveries to their strategic oil reserves. So how does this hurt our economy? Well while the drop in gas prices mean the average American family is saving $400 per year on gas compared to a year ago. Many of the high grossing jobs in our country are directly and indirectly tied to American oil production. Since it cost more to produce in America due to many factors and our demand being low at this time with Saudi trying to build market share our jobs are at risk. Many american based oil producers and companies have announced layoffs in the last few days. As the price continues to drop or even flatten out and remain this low, Texas can expect a reduction of good paying jobs. According to some analyst we could see a reduction of 25,000 jobs by years end. How can we prevent that? First I would like to see the ban on US oil production lifted. This will allow us to export to other nations our river of the black stuff. Second, Pressure needs to be placed on Saudi to stop price fixing the market. Im sure Russia will help with this. Third, shift oil production employees who may be at risk of loosing their jobs, to oil infrastructure construction. The last complex refinery with significant downstream unit capacity began operating in 1977. This is a great time for our government to loosen regulations on permits and construction of these facilities and allow our oil field workforce to shift into a different growth sector for a few years while production and demand come closer in line.
Posted on: Thu, 13 Nov 2014 18:59:37 +0000
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