Is that this the tip of the West Texas oil area?

The COVID-19 pandemic has sparked multiple crises, and perhaps its most colossal aftershock is the impact it has on the oil industry and the people who depend on putting food on the table.

A global oil glut and pandemic-induced reduction in demand have made life difficult for many Texans, including those who call home the West Texas oil field.

Texas is the most prominent victim of this crisis-induced oil bankruptcy.

“As prices fell, Ruffians, truck divers and engineers were quick to lose their jobs,” reported Fortune Magazine.

On May 15, the number of oil rigs in the Lone Star State was 150 – up from 485 oil rigs a year ago, according to global energy technology company Baker Hughes.

The price of West Texas Intermediate branded crude oil, the most famous American grade, was $ 63.17 on Wednesday May 20, 2019. On May 21, 2020, a “whopping” USD 33.92 per barrel was registered according to Macrotrends.

Bloomberg estimated the price per barrel required to break even for oil producers in the Permian Basin at $ 47. If low prices remain stable, operators will struggle to survive and the effects could spill over into the economy.

“The demand destruction caused by the pandemic was truly unforeseen and had never occurred before,” Stephen Robertson, executive vice president of the Permian Basin Petroleum Association, wrote in an email to RA News.

An analysis found that a drop in production to 2019 levels in the Permian Basin equates to a year of destruction to economic growth, Robertson said, adding that without the tax revenue from the basin’s power generation funding for public education, it will disappear.

“The additional funding for public education that was made available during the last Texas legislature came from tax revenues collected directly and only from the oil and gas industry,” he said.

Andrews County has only 22 reported cases of COVID-19, but the blow to the global oil industry has hit all of West Texas.

“The county is considering layoffs for the first time and the city of Andrews will hold back on repairing roads and building a new town hall,” NPR reported.

Part of the initial problem for the current downturn was continued global oil production when the pandemic broke out and lockdowns began, reducing demand. An oil war between Saudi Arabia and Russia boosted production. Ultimately, both countries agreed to end the war, while OPEC saw the removal of nearly 10% of the world’s supply in an attempt to put the ship back in order.

However, the damage has already been done in Texas.

“Oil-producing regions of the US will be much harder economically affected: not just business investments and family incomes, but also the tax base of local communities, which affects education, infrastructure and other public services,” said Columbia founding director of the University Center for Global Energy Policy Jason Bordoff.

Will this be the end for oil workers in the oil-rich regions of Texas? Some say the answer is yes.

“The Permian Basin has experienced such downturns before. But after this year, things may never be quite the same for the most productive oil field in the country … The conditions that made the Permian Basin the most productive oil field in the country are probably gone for good, “Foreign Policy reported.

But Robertson is optimistic: “When the world’s economies grow again, the demand for energy will return, and the Permian Basin is still one of the best regions in North America, if not the world, not only for oil and gas, but solar as well. and wind energy, ”he said. “I would say many are cautiously optimistic that when the world goes back to work, the Permian Basin will too.”