Historically, the relationship between oil and gas prices  was somewhat counter-cyclic, when one was down, the other tended to be up.  As such, booms and busts were mildly mitigated, and some semblance of the industry would survive.  Currently, both product prices are at multi year lows.  (The graphs below show the product price history for the last 25 years.)  The result is a brutal business climate for producers as well as the service sector.  We are quickly losing the talent and resources that the industry has worked hard to develop over the last several years.  The question of “how low can it go and how long is it going to stay there?” is the topic of nearly every conversation I have experienced in recent weeks.    No one has the answer to that question, but I am counting on the old adage “the best cure for low prices is low prices”.  Let’s hope that the New Year will bring some relief to one or the other, if not both.

 

Crude Price 25 yr Gas Price 25 yr

 

Price graphs from Barchart.com

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About the author

Tom Hohn is a petroleum engineer who has worked in the oil and gas industry for 40+ years. He has endured several booms and busts during that time. In reality, the tough years outnumber the good years, but it is a great industry that has treated him well.