The Brief: Oil Drops To $50. Where Will It End?

The Big Conversation

 By John Reynolds

Another day and another threshold is crossed in oil’s steadily downward march in value. This time it was the price of U.S. oil dipping below $50 during the day on Monday. 

Writing for the Houston Chronicle, Ryan Holeywell and Collin Eaton talk to experts who indicate there’s nothing to prevent oil prices from falling further. 

“No one is foolish enough to pick a bottom,” investment manager Tariq Zahir told the Chronicle. “You have too much oil out on the market. Right now we haven’t seen any sort of fundamental change.” 

In Texas, oil prices finding a floor in the first part of the year could create a “flattening” in exploration in the Eagle Ford shale in the second half of 2015, per Jennifer Hiller and Vicki Vaughan of the San Antonio Express-News. Any slacking in production could be remedied, though, if prices recover to $70 levels, according to one expert consulted by the reporters. 

Others say oil companies have too much invested in Texas to walk away just yet. Chris Ramirez of the Corpus Christi Caller-Times writes:  

Hiring in energy should “remain steady” this year, said Omar Garcia, CEO of the South Texas Energy and Economic Roundtable. However, it’s not likely many companies will invest in large, expensive projects while crude prices fluctuate. 

“Everyone is adjusting. This is a long-term (energy) play, and oil companies are committed to this region,” Garcia said. “This isn’t an investment they just going to walk away from.” 

And the Houston Chronicle’s real estate writer Nancy Sarnoff talks with local Realtors about the potential impact of sagging oil prices on the luxury end of the market. 

“(Grace) Medellin said she noticed the overall market slowing around the holidays, but she’s had a couple of open houses recently where activity was brisk. She’s not yet sure how lower oil prices with affect the top end of the market. ‘We’re going have our first sales meeting of the year tomorrow and I’m sure we’ll be talking about that,’ she said.” 

John Reynolds is the newsletter editor for the Texas Tribune where this story originally published. It is reprinted here through a news partnership between the Texas Tribune and the SM Corridor News || @CorridorNews