The Energy Report: When we talked last October, you predicted that low oil and gas prices would fuel an economic resurgence in the U.S. and impact everything from politics to job creation. Is the economy living up to its potential?
Matt Badiali: I think so. Companies moving here and building new factories are citing low energy costs. The average family is saving $1,200–2,500 per year, which is a pretty big savings. But they don’t seem to be spending, so it hasn’t impacted the overall economy as much as I thought it would. On a bigger scale, low energy prices beat low-cost wages and low-cost materials: In today’s economy, low energy costs will bring the economy to you.
July 28–31
TER: It has had an uneven effect on jobs, however, particularly in oil-producing areas. You recently wrote that Saudi Arabia is playing chicken with oil prices. What impact is the continued flow of oil into the market from the Middle East having on companies in places like the Eagle Ford?
MB: It’s having massive impacts, particularly in the Eagle Ford and the Permian Basin. Harold Hamm, CEO of Continental Resources Inc. (CLR:NYSE), calls the three big shale plays—the Bakken in North Dakota, Permian Basin in West Texas and Eagle Ford in southeast Texas—Cowboyistan.
“This extended period of lower oil prices is causing companies to become more efficient.”
This extended period of lower oil prices is causing companies to become more efficient. They’re not drilling willy-nilly. In fact, 60% of the rigs, some 1,000 of them, aren’t working right now, and as many as 60% of wells that are being drilled are not being completed—about 4,000 of …read more