Saturday, March 7, 2015

Reality Sets In

Anytime a commodity starts appearing in abundance you can usually expect its value to drop. This axiom doesn't always apply in a global economy; but it has tremendously affected the price of oil. A few years ago OPEC had a stranglehold on the availability and supply of crude oil. Prices soared, especially with the rumors that the supply was short. Political unrest and violence  also abetted the volatility and cost of oil. As most know, we have seen a barrel of oil fall to unprecedented levels-almost $40 a barrel. This from a recent high of $145 plus. A strange thing happened at an OPEC meeting last year. Rather than curtail supply to counter the abundant discoveries brought on by directional drilling and the removal of oil trapped in shale deposits, OPEC decided to maintain (and even increase) its production. The inevitable happened and we now are locked in an economic battle of wills; with tumbling prices causing wholesale panic in the petroleum industry. A perfect storm has occurred, as China and the world economy in general have slowed exponentially. And; along the lines of "no good deed goes unpunished"; years of calls to conserve and increased efficiency of internal combustion engines have lowered domestic demand.
In the gate guard world, the perfect storm was that word had gotten out that fairly easy money could be made living and working in the oil patch in South Texas. The result was a yearly increase in the sheer number of candidates vying for a finite number of jobs. (A horrific winter hasn't helped either). With the onset of the oil glut, you inevitably ended up with folks basically wintering in South Texas, unable to secure a gate. A few were "lucky" and were able to live off the largesse of a few guard companies by staying in their company yards. Expect this tradition to undergo radical change, as early as the upcoming winter; if not sooner. Back in the day the demand for guards; especially in the summer, almost demanded that a guard company keep folks on standby-no more. This summer should be telling in the gate guard community.
While it has been difficult to see our kindred spirits struggle to find work; until recently is hasn't hit close to home for us. My sour predictions have unfortunately borne fruit and we are seeing the affects of cuts amongst those that frequent our gate. New faces are a poignant reminder of those no longer serving our job site and the layoffs are starting to have a profound affect. Some changes were needed and excesses curtailed; but that hasn't lessened the pain. As gate guards it is imperative that we remain in good stead with the companies that we are charged with protecting. While the vast majority of guards probably conduct themselves in a responsible, professional manner; a reminder to do so may be in order. I inadvertently received a tip from a reputable source the other day. Simply ingratiating yourself with the people you work with can go a long way to extending your longevity. Also make sure you get your name out there, so they know who you are.

As time inevitably rolls on, the winter Texans will head back north and gates should come available. The question is how many? The economic viability of directional drilling is in grave peril and this could signal the end of drilling as we currently know it. I believe the days of gate guarding from an RV are nearing an end. Before long, uniformed guards and shacks will be the order of the day. The worst case scenario is if oil never fully recovers and we have a complete bust; not unlike the one in East Texas in the late 70's and early 80's. Then we'll simply have low cost guards babysitting anything that's left that is worth protecting.

I have heard pundits say that oil will both sink to $20 a barrel or rise to $200 a barrel by years end. There's no telling who is right. I do not think we'll see $150 a barrel oil for some time. Let's hope I'm wrong.

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