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| Out of service oil rigs. |
Enjoy low gasoline prices while you can, they are not going to last,
Oil rigs in operation are declining dramatically and oil production won't be far behind.
The number of U.S. oil rigs fell by 26 to a total of 439 in the latest week, oil-services firm Baker Hughes reports, marking the ninth straight week of declines. The number of rigs has fallen by 606 from a year ago.
-RW
Economists always say that high prices are the solution to high prices, meaning high prices causes more production which increases supply and causes prices to go down.
ReplyDeleteYou seem to be saying low prices cause high prices, reducing supply and causing relative shortages.
I suppose both do happen but the price is going to settle where costs are recovered with a slight profit on aggregate. That's the correct price and the correct supply.
The last I heard there are only 4 rigs working the North Slope of Alaska. And they aren't drilling new wells.
ReplyDeleteMy numbers may not be exact but I think the Slope is down to about 10,000 people, as the oil companies are on Maintenence levels now and not production, from about 30,000 a year ago. All the man camps that were hauled up the last 2 years are either vacant or at about 25% capacity. Sad. My company has hauled up about 10 loads in the last 3-1/2 months, compared to about 500 during the same period last year, and the previous 2 before that. Hard times. I have seen it before but not quite this bad. Hunker down time. To tell the truth I saw it coming months ago, partly from experience and I have to say partly from reading EPJ.