Friday, January 9, 2015

Oil & Gas Rig Count Falls to 14-Month Low

The Baker Hughes oil & gas rig count has fallen to a 14-month low of 1,750 after steepest five-week drop since 2009.

(ht Jeff Kearns)


  1. I don't see the problem. When prices are high much is invested in producing it, when prices decline many close up shop. The only way this is a problem is if lenders extended lots of money on petro collateral, which they did in this distorted financial market. That problem is too cheap money noting to do with the oil market in particular.

  2. Yeah, you are a real economic genius. I pay cash for a rig that produces oil profitably at $100 per barrel. No problem at $50 per barrel.

    1. And the problem is what exactly? People invest all the time in enterprises that turn out unprofitable. People bought JC Penny stock when it went to the disastrous everyday low price model. Many high tech acquisitions turn out to be totally wasted money.. The US should have businesses in it that produce oil if they can do so profitably. If the profit disappears because of market forces then many of those businesses should close.

    2. Because if your entire Industry model is dependent on having cheap credit and a high product price then you might find it to be a malinvestment.

  3. Here is a graph of rig counts since Jan 2005 if anyone is interested in a longer term perspective.