Oklahoma Economy Taking Hit As Oil Prices Continue To Fall

Oklahoma doesn’t have the money it needs right now, mostly because the state’s oil industry is struggling; and with oil prices at an all-time low, it doesn’t look like it’s going to get any batter anytime soon.

A barrel of crude oil is just above $30, and while that means lower prices at the pump for consumers, the oil and gas industry is taking an unprecedented hit.

1/13/2016 Related Story: Price Of Oil Keeps Falling And Falling

"I don't think anyone saw this coming," said Tom Seng, an assistant professor of Energy Business at the University of Tulsa.

He's been watching the market for 35 years and said the current climate has been a shock.

"We've had these booms and busts for decades now, but I don't think anyone saw the magnitude of this, in terms of the fall. I mean, in 18 months we've gone from around $100 to $30," Seng said.

And companies are suffering.

“The Wall Street Journal estimated about a third of the oil and gas companies in the U.S. may find themselves filing for bankruptcy protection,” Seng said.

BP announced this week that it will lay off 4,000 employees in exploration and production. Other companies like Exxon Mobil and Chevron are cutting future spending - Chevron is also cutting 10 percent of its employees.

Companies here in Tulsa are also rumored to be making cuts as well.

Erin: “In this kind of climate is there someone to blame? Do we point the finger at OPEC? Who do we point the finger at?
Tom: "You know, we're the victims of our own success…but at the same time we were increasing that production, global production was also increasing."

Meaning the market is flooded with supply without an equivalent demand.

Seng said if every company in the U.S. shut down production today we would still have enough crude in storage to meet demand for 30 days - a level of inventory that hasn't been seen in 80 years.

As for how long this will last? Seng said it's hard to predict, but that it's not going away anytime soon.

We checked with Williams Companies to see if they are making any changes. They said, "In light of continued challenging market conditions -- we've been focusing on controlling costs across the company since the beginning of 2015 and those efforts continue."