Saturday, May 3, 2014

Something to Remember If You Work In The Oil Fields.....

I lived in West Texas before, during, and after the boom this comment talks about.   Do not believe anyone who tries to tell you that "This time is different", "This time we won't have a bust", "This time this town is big enough to generate money without oil".   In a comment on Belmont Club,  a user by the name of "Charles42" sums up WHY this time is no different than it ever was:

"In 1980 oil was equivalent to about 106@ barrel in current dollars. Reagan took off price controls and eliminated the excise profits tax in 1981. That knocked the price of oil down to $60@barrel in today's dollars. In 1985 he talked the Saudis into increasing their production. That knocked the price of oil in today's dollars down to roughly $30@ barrel in 1989. That falling oil price bankrupted the soviet union and gave the USA a strong eonomy during the 1980's and 90's. The price of oil bottomed in 1999 in today's dollars at 19 dollars a barrel.
The same thing is going to happen 10-15 years from now as fracking increases supply of oil and rising sales of natural gas trains trucks and buses and electric cars curb the demand for oil....."
(Click through the link to read the rest)

Those who are wise will save their money and avoid debt, will live as frugally as is possible in a boom town, and will be very careful about buying real estate at the boom-economy's grossly inflated prices. The oil business is a good business, and there is room for hard workers in it, but work smart, and look out for yourself - and remember that oil is always a boom and bust gamble in the end.

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