Over the past couple of years, one of the saving graces for the faltering United States economy has actually been the expansion of domestic oil and gas production companies. They provided jobs, more energy, and helped to contribute to lower gas prices at the pump. However, as welcome as the drop in price is for some consumers, it is actually causing some issues for those companies in the industry. Lower prices naturally mean lower profits, and lower profits mean that they will eventually have to lay off a number of their workers.
These companies are cutting their budgets and tightening their belts. Personnel are one of the first things to go in many cases. While companies do not relish reducing their number of employees, it is necessary for some companies if they want to stay in business. Oil and gas companies are reducing the amount of exploration they are doing as well. Since the supply is already so great, it does not make sense to spend more money looking for more reserves, at least not yet. Instead, companies are looking for ways that they can make their operations more efficient.
Trimming the budget by cutting some high-priced staff is one way to do that. Looking at alternatives when it comes to equipment is another way. Replacing old and outdated equipment and technology with newer and better options is always a good choice.
It’s unclear exactly how long this surplus of energy and lowered demand will last. Companies are still trying to make sense of this change, which came on rather quickly. Over the course of less than a year, the price of oil per barrel dropped by nearly half.
What will the drop in oil prices mean for the rest of the country? Even though the price of gas could negatively affect the oil companies in the short term, most experts do feel that it will still be good for the overall economy ultimately. Since consumers are spending less on gas, it allows them to spend more at retailers. Companies that ship items or that use gas and oil in any capacity are finding savings as well. Right now, the benefits outweigh the drawbacks.
However, those who are losing their jobs probably do not see it that way at all. Hopefully, the jobs will bounce back when the oil prices start to go in the other direction again, but there’s no telling exactly how long that might take.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.
