Low Prices Cause Carnage In The Oil Industry
RENEE MONTAGNE, HOST:
You need only look back a couple of years to find a barrel of oil selling for $100. These days, the price is less than a third of that. And the International Energy Agency said yesterday that an oversupply and weak demand could push prices even lower. That price collapse is causing chaos in the oil industry and a quarter-million jobs lost around the world. NPR's John Ydstie checked in on some of those affected in Texas to assess the damage.
JOHN YDSTIE, BYLINE: Clint Walker runs CUDD Energy Services and provides hydraulic fracturing, pumping and other underground and well-head services. Two years ago, Walker and his company were struggling to keep up with demand. But when we reached him at his office in Midland, Texas, recently, he was distracted by other things.
CLINT WALKER: Looking to the north, watching the tumbleweeds go across the street here, I actually am doing that (laughter).
YDSTIE: Activity has fallen off dramatically for Walker's company. It's laid off about a third of its workers, close to a thousand people. And 30 percent of its pumping capacity is now in storage. But the rest is still pumping oil, even at $30 a barrel. He says some operators are still producing to meet the legal requirements of their mineral leases. For others, he says, it's simple survival.
WALKER: There are some folks that are just trying to maintain cash flow so they can live to fight another day.
YDSTIE: Walker says his company is solid, but many others won't make it.
WALKER: We're starting to see bankruptcies and buyouts because a lot of these guys just have so much debt. You can't pay your debts, it's a bad way to be.
YDSTIE: With oil now stuck at around $30 a barrel, Walker's hearing a lot of sad stories.
WALKER: Saying, oh, my neighbor got laid off, and I never thought that he would get laid off, or she would get laid off because she'd been with the company 30 years. And you're starting to see the toys go for sale, like the boats and motorcycles and the RVs.
RYAN WASHBURN: I know at least two people that got their cars repossessed.
YDSTIE: That's Ryan Washburn. He worked in the Eagle Ford Shale in Texas, maintaining fracking equipment and driving a fuel truck. He was laid off last year. He's used up his unemployment, and he's had trouble making the rent on his apartment in Corpus Christi.
WASHBURN: For one month of rent, my little brother offered to pay rent, which - it was nice of him, but of course, didn't make me feel very good.
YDSTIE: So, Washburn decided to join some of his friends who were selling their blood plasma to get money.
WASHBURN: They poke you in the arm like you're giving blood, but the blood goes into a centrifuge, and it spins all the blood around and separates the plasma from the red blood cells, and then they pump the red blood cells back into your arm. And then once you're done with that, you have a debit card that they deposit money onto. So a lot of us would do that and still do it.
YDSTIE: But he can only do that twice a week, and the most he can make each time is about $50. This month, he finally moved in with his brother and sister-in-law in Houston. Tough times indeed, but, Clint Walker says things could turn around quickly. He argues the gap between supply and demand is much smaller today than it was back in the oil bust of the 1980s.
WALKER: Now today, you have one little blip, and you're at equilibrium.
YDSTIE: But, Walker admits it could get worse before it gets better.
WALKER: Could be tougher times, but something that the Permian Basin in Midland, Texas, are used to, and, you know, we'll be around here for the next uptick.
YDSTIE: John Ydstie, NPR News. Transcript provided by NPR, Copyright NPR.