Some sectors of the US economy celebrate low oil prices. After all, high prices have been a major factor for most people in the country, and spending a little less on gas seems like it would be good for everyone. One sector that isn’t quite as excited, though, is the oil sector. When prices fall, people can be a bit skittish about investments – and not knowing where the local economy is going impacts everyone from property owners to those who manufacture API thread protectors. Understanding what low prices mean for the Houston, TX economy means understanding what the prices mean for the whole industry.
Direct Effects in Texas
As one might expect, the initial issues caused by the lower oil prices, according to EIA research, aren’t going to be the best news for Houston. Smaller and newer businesses are going to be hit the hardest because they’ll be facing an unusual proposition – the rate of return on a new well has crashed, making it highly problematic for new players in the oil game to get started. This, in turn, will likely go on to impact a great number of businesses that make their money off of wells, from monitoring companies to staffing organizations. Low prices mean less money, and that will mean fewer jobs.
At the moment, lower prices tend to mean spending conservatively. This doesn’t mean major drops in wages or layoffs. It does mean, however, that employers will take on fewer new hires and that current workers may work less. As oil prices decrease, it makes sense for Houstonians to spend less on everything from housing to entertainment. Less money in the economy may depress the entire area. Yet, the fact that workers will stay working should mitigate most of the impact that the low prices can bring.
What Oil Prices Mean to Houstonians & The Industry
Fortunately, it’s not all doom and gloom. Costs related to drilling will go down with the price of oil, and shale oil drilling still isn’t really in decline. This means that money will continue to flow into Houston, even if it’s not quite as fast as in the past. This gives the city a certain degree of safety, and should keep the vast majority of those working on oil rigs in work for the foreseeable future. So long as companies don’t panic, the odds are in favor of the city continuing to see a strong economic climate in the future.
Low prices are as temporary as high prices, so those in the Houston area don’t need to panic. Some businesses will suffer during this downturn, but others will continue to turn a profit. The best thing that any business can do is to behave reasonably. They can also make sure they’re prepared for the future, and ignore those who are predicting the end of oil. A good business knows that everything is cyclical, and that the most important thing is that the wells stay open. So long as cooler heads prevail, Houston – and the rest of the US oil industry – will be fine.
What It Means for Essentra
That’s what Essentra Pipe Protection Technologies always does. We’re keeping our heads cool and our plans in sight. We know our headquarters in Houston, as well as our facilities all over the world, can expect to see a strong future in the local economy and oil industry. Contact us today for the best in API thread protectors and other pipe protection technology.