The Oil Price Crash is Worse Than Coronavirus Fears
There is gloom in America’s oil patch. The revolution brought about by hydraulic fracturing made the country the world’s largest oil producer and after decades, again an energy exporter. Now a combination of coronavirus and economic impact is working in tandem with competitors flooding the market.
He was bringing home 6 dollars a week. He had been working in the oil fields of Western Pennsylvania prior to the crash. He had a family of 5 to feed and shelter.
I’ve made the argument on this page in the past a bottoming out of the oil market isn’t good for the United States. It’s usually followed by ill-informed people telling me cheap gas is good for everyone, although. Not clearly good for the oil and gas workers laid off. And the millions of support jobs we’ll also see vanish.
My dad told me when he was a kid during the Great Depression you could buy 8 gallons of gas for a dollar. Sounds great, doesn’t it? The trouble was, as he explained, very few people could scrape together a buck. My grandfather was working 6 days a week managing a YMCA in Bradford, Pennsylvania. He was bringing home 6 dollars a week. He had been working in the oil fields of Western Pennsylvania prior to the crash. He had a family of 5 to feed and shelter.
Wouldn’t it be great if bread was a nickel a loaf?
Not if you’re the baker who spends 75 cents on ingredients. You’ll soon stop baking. Collapsing prices equal lost jobs and it spreads as fast and as nasty as any disease virus.
Another aspect is national security. Energy independent nations can make decisions about staying out of conflicts. If we’ve got our own, our children don’t need to die to keep oil shipping lanes open. If our fields are closed because we can’t afford to any longer compete, we lose our security. Former Secretary of Energy Rick Perry makes it clear at this link.