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Are there any signs of this starting to happen given how low prices have gone?

by nugget 6y ago

deleted 6y ago
[deleted]
drone 6y ago
Yes, most of the major oilfield service companies have started layoffs, and they're starting to ramp up. During the last oil downturn, 2015-16, it wasn't just the O&G upstream/downstream companies, it heavily impacted manufacturing (Houston is a big manufacturing center) companies, real-estate, etc. We're already starting to see some of this, but it's also getting swept up with the pandemic lockdown, so it's hard to tell one apart from the other ATM, except that oilfield services are shedding employees quicker than other large firms, anecdotally. Edit: it's worth noting that while the last downturn was heavily impactful on the energy, manufacturing, and real estate sectors, the recovery was pretty quick as the overall impact to the economy was about 1.6% down, and the rest of the overall economy was booming.
asdfman123 6y ago
I used to work in the industry. In the near term after a price drop, companies will still have projects they need to work on, and they have cash buffers on hand so they don't have to axe their whole staff after a bump in the road. However, those cash reserves will quickly burn though. And the worst part is a lot of Houston's economy is buttressed by oilfield services companies, which make all their money off drilling new fracking wells. Right now, it makes 0 sense to drill new fracking wells (-40 sense, to be more accurate), and they have big loans on billions of dollars worth of equipment. It's gonna hurt soon, and it's going to hurt very bad.
beerandt 6y ago
One of the popular indicators is number of listings and prices for F-250 class and bigger trucks, especially in places like West Texas and North Dakota. Of course the automotive market in general is "non-typical" at the moment, so there are probably multiple interpretations to be made of whatever the market status is.
- blaser-waffle 6y ago
  Though I'm from the US I currently live in Alberta, Canada, and can confirm. I recall seeing CBC news articles about all of the cars and trucks left abandoned in the parking lots of the Edmonton and Calgary airports. All of the out-of-province workers just split once the pickings became poor. Cheap Tacoma trucks for a year or two, I regret not picking one up off of Kijiji (aka Canadian Craigslist) while I had the chance...
- hermitdev 6y ago
  The best time to pick up a used truck/boat was to pay attention to the local plants where workers were going on strike (not even counting layoffs in times like these). I saw this extensively in the Pacific Northwest (Eastern Washington, Northern Idaho, Western Montana). Any time any of the big plants or mines striked was a good time to be buying used.
IAmGarrett 6y ago
Currently over 20% of Houston office space sits empty (compare to Denver/Chicago ~13%). That’s because we haven’t even absorbed the empty office space left from the 2015 oil downturn. Office owners are now doing very favorable deals for new tenants as they brace for the coming bankruptcies, rent relief letters, and space reductions. This is likely to be painful for many more months in Houston, even if there is a quick recovery from COV-19.

Are there any signs of this starting to happen given how low prices have gone?

by nugget 6y ago

Are there any signs of this starting to happen given how low prices have gone?

deleted 6y ago

[deleted]

drone 6y ago

Yes, most of the major oilfield service companies have started layoffs, and they're starting to ramp up. During the last oil downturn, 2015-16, it wasn't just the O&G upstream/downstream companies, it heavily impacted manufacturing (Houston is a big manufacturing center) companies, real-estate, etc. We're already starting to see some of this, but it's also getting swept up with the pandemic lockdown, so it's hard to tell one apart from the other ATM, except that oilfield services are shedding employees quicker than other large firms, anecdotally. Edit: it's worth noting that while the last downturn was heavily impactful on the energy, manufacturing, and real estate sectors, the recovery was pretty quick as the overall impact to the economy was about 1.6% down, and the rest of the overall economy was booming.

asdfman123 6y ago

I used to work in the industry. In the near term after a price drop, companies will still have projects they need to work on, and they have cash buffers on hand so they don't have to axe their whole staff after a bump in the road. However, those cash reserves will quickly burn though. And the worst part is a lot of Houston's economy is buttressed by oilfield services companies, which make all their money off drilling new fracking wells. Right now, it makes 0 sense to drill new fracking wells (-40 sense, to be more accurate), and they have big loans on billions of dollars worth of equipment. It's gonna hurt soon, and it's going to hurt very bad.

beerandt 6y ago

One of the popular indicators is number of listings and prices for F-250 class and bigger trucks, especially in places like West Texas and North Dakota. Of course the automotive market in general is "non-typical" at the moment, so there are probably multiple interpretations to be made of whatever the market status is.

blaser-waffle 6y ago
Though I'm from the US I currently live in Alberta, Canada, and can confirm. I recall seeing CBC news articles about all of the cars and trucks left abandoned in the parking lots of the Edmonton and Calgary airports. All of the out-of-province workers just split once the pickings became poor. Cheap Tacoma trucks for a year or two, I regret not picking one up off of Kijiji (aka Canadian Craigslist) while I had the chance...
hermitdev 6y ago
The best time to pick up a used truck/boat was to pay attention to the local plants where workers were going on strike (not even counting layoffs in times like these). I saw this extensively in the Pacific Northwest (Eastern Washington, Northern Idaho, Western Montana). Any time any of the big plants or mines striked was a good time to be buying used.

IAmGarrett 6y ago

Currently over 20% of Houston office space sits empty (compare to Denver/Chicago ~13%). That’s because we haven’t even absorbed the empty office space left from the 2015 oil downturn. Office owners are now doing very favorable deals for new tenants as they brace for the coming bankruptcies, rent relief letters, and space reductions. This is likely to be painful for many more months in Houston, even if there is a quick recovery from COV-19.