Oil Industry Put To Reality Check

Friday, November 21st 2008, 5:19 pm
By: News On 6

By Dan Bewley and Scott Thompson, News On 6

UNDATED -- After days of falling, oil climbed a bit on Friday. But it's still selling for around $50 a barrel. Those prices have oil and gas industry experts here in Oklahoma very worried.

Analysts say Oklahoma is immune from the national economic troubles, mostly because of our strong oil and gas industry. But as the price of oil falls, there's concern we may be running out of immunity.

For 83 years an oil well just outside Bristow has been pumping up crude. The well is one of two dozen owned by Stan Earnhardt.

"I've got some in Hughes County, some in Pontotoc County," said Earnhardt.

Earnhardt has been in the oil business all of his life. Lately he's been watching the price of oil nosedive, this week dipping below $50 a barrel.

"I can still pay the bills, I can still make a little bit of money at $49, $39 maybe not," said Earnhardt.

Earnhardt admits he's like everyone else and loves paying a dollar sixty-something when he fills up his truck. But he's worried that if the price of oil continues to drop producers may start to lose money and be forced to shut down their wells and it's not so easy to start those wells back up again.

"Lots of wells may not survive this if they're not maintained, there's not going to be the drilling," said Earnhardt.

"Well it gets a little scary," said Dewey Bartlett.

Bartlett is president of the Oklahoma Energy Resources Board. He says last year the state received more than a billion dollars in tax revenue from the oil and gas industry, that fee is based on the cost of a barrel. The lower it goes could mean bad news for the state budget.

"Fewer taxes paid to our state and local governments, fewer job opportunities, etc, etc, etc," said Bartlett.

Both Bartlett and Earnhardt feel it's only a matter of time before the price starts to make a climb and fear the gas prices we saw this summer will only be the beginning.

"When we finally get through this, $149 oil may look cheap," said Earnhardt.

Some companies have already scaled back their drilling operations. For example, Oklahoma City based Chesapeake Energy has 22 fewer drilling rigs now than this summer.

Keep in mind, the oil industry is responsible for tens of thousands of jobs in Oklahoma.