Oil Prices ‘Lower For Longer’ But Is There A Rally In The Making?
News Article Sponsored by LeeCo Manufacturing International
One of the world’s biggest consulting firms is predicting a tough year for the oil industry that could mean more lay-offs and cutbacks. But just wait a few years…
Oil prices plummeting by two-thirds in a little over a year has been bad for the industry of course, but the damage is less than some might have guessed such a drop would cause.
“It’s probably been a little better than people thought,” says John England, a top oil and gas expert at Deloitte, the huge consulting firm whose Houston office analyzes the energy industry and just released a report called “Waiting for a Rebound.”
England says some oil and gas companies made it through 2015 by buffering themselves with financing and cost-cutting but in 2016, will have to make hard decisions about laying off workers and selling off equipment.
“It’s going to be the year in which people make tough decisions, but those decisions are going to, I think, shape those companies and industry for many years to come,“ says England.
England says the industry will likely have to accept “lower for longer” when it comes to oil prices.
“Lower for longer seems to be the mantra for a lot of people in the industry, and I think as people accept that they’re going to have to make those tough decisions to try to keep their companies in a position to survive the current downturn and then to hopefully thrive when things turnaround in the future.”
England says that turnaround could mean a real rally for the Texas energy economy.
“It sets the stage for a rally,” he says. “Now that rally may be a few years out so I think there’s an opportunity to see growth the way we’ve seen in the past.”