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.
Price graphs from Barchart.com
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