Chaos as oil prices plummet
Layoffs, furloughs and bankruptcies
NEW YORK — The global economic crisis caused by the coronavirus pandemic has devastated the oil industry in the U.S., which pumps more crude than any other country. In the first quarter, the price of U.S. crude fell harder than at any point in history, plunging 66% to around $20 a barrel.
“It’s just a nightmare down here,” said Lee Levinson, owner of LPD Energy, an oil and gas producer in Tulsa, Okla. “Should these low oil prices last for any substantial period of time, it’s going to be hard for anyone to survive.”
Crude prices recovered some ground, trading at around $28 a barrel Friday, after a week in which President Trump tweeted that he expects Saudi Arabia and Russia will end an oil war and dramatically cut production.
On Friday, he met with oil executives but there were no announcements, and prices remain well below what most U.S. producers need to stay afloat.
Among the latest casualties is Whiting Petroleum, an oil producer in the Bakken
shale formation with about 500 employees that filed for bankruptcy protection Wednesday. Halliburton, a major oilfield services provider, furloughed 3,500 of its Houston employees, ordering workers into a one-week-on, one-week-off schedule.
“You will see a tremendous loss of jobs in this industry,” said Patrick Montalban, owner of Montalban Oil and Gas, based in Montana, who along with his son is slashing his salary in half.
World oil demand fell 7% in the first quarter, and is expected to fall 14% in the second quarter, according to IHS Markit. If that wasn’t enough, OPEC and Russia couldn’t agree on production cuts to prop up prices, so Saudi Arabia flooded the market with cheap oil.
Many American shale producers feel targeted by Saudi Arabia, which they suspect of trying to put them out of business.
“We’re just burning through money down here,” said Levinson, LPD Energy’s owner. “And how long we can last is anyone’s guess.”