US Oil Companies
US oil companies have been trying to cut costs for the last few years but the current budget cuts by the Obama administration could prove a disaster. US oil companies are facing the worst downturn since the oil price began to drop in the 90’s and are now reeling from a loss of thousands of jobs and thousands more of drilling rigs. A government shutdown and government debt ceiling crisis could mean that US oil companies could suffer the same fate as their European competitors in the past, as the US economy will suffer, not with the same kind of economic stimulus money we saw during the recent recession, but instead with massive job losses, lower profits and a loss of drilling rigs and exploration budgets.
Financial Meltdown Of Banks:
As the United States economy has tanked during the last two months due to the financial meltdown of banks, and with the Federal Reserve cutting interest rates to try to encourage economic activity, oil prices have soared upwards. When the United States cut its fiscal budget and began to increase taxes on job creators and businesses, including oil and gas companies, it was the beginning of the end for US oil companies. We had already begun to see many oil and gas companies filing bankruptcy due to overproduction. That is not going to help the situation either.
These Federal budget cuts will put a damper on oil exploration as well as the production of new rigs. This could lead to more layoffs and a slowdown in exploration in the future. Even if there are some tax incentives, the cost of operating a rig is going to increase substantially, meaning that the production from that rig is going to be significantly less than it would have otherwise been. This is not going to help the US economy or US job market either. It will simply be a loss of jobs, a loss of revenues and a loss of capital investment, all for the sake of the current administration’s political agenda.
Forced To Close Their Rigs And Cut Back:
The fact that these jobs are no longer being created means that companies will be forced to close their rigs and cut back on new oil production in order to continue paying their workers. As drilling companies continue to lose jobs and production, they will be forced to sell their assets and liquidate in order to stay afloat. This could mean that thousands of jobs will be lost, meaning that the number one priority for companies could be the hiring and training of new employees instead of investing in new technology and machinery.
Sapped By COVID-19
Sapped by COVID-19, US oil companies may even start to drill themselves out of their leases in areas that were once profitable. and drilling to those reserves is a costly, time consuming and difficult process that requires very specialized equipment and expertise that oil companies do not necessarily have available at this point.
Prime Drilling Grounds For Oil Exploration:
In fact, many of the areas that were once considered prime drilling grounds for oil exploration are actually no longer considered prime drilling grounds, which means that many of the jobs that the oil industry once held will be lost forever, and that the United States will not be producing enough oil to meet the needs of its economy and its consumers. Oil prices will still continue to rise, meaning that companies will still be paying huge amounts for the fuel to run their rigs and still be running up huge debts. In the long run, that means fewer jobs for oil companies, less profits for them and a loss of a significant portion of the country’s economy. If this continues, there is no way that companies can pay back their debt.
United States Is Losing Ground:
The United States is losing ground on oil production because companies are now cutting down on capital expenditures in order to make room for costs that will result in lower oil prices in the future. As they run into trouble, they will still have enough money left over at the end of the year to buy their own fuel in order to use in their operations. But that leaves them with no additional cash to invest in the development of their infrastructure, which means that less of their resources are going towards growing and developing the nation’s economy. As that occurs, US oil production and employment both decrease, which means that the United States will continue to lose ground to countries that can produce oil cheaper and which will hurt the economy much more than it is hurting currently.
United States Ignoring This Important Development:
So if the United States is facing the possibility of losing thousands of oil jobs and billions of dollars due to COVID-19, then why is the United States ignoring this important development? The United States will still have to deal with the problem of oil prices going down if it does not take immediate action. It also needs to address the issue of the cost of the future, where companies will need to replace the thousands of rigs that will be laid off during a period of economic decline. The United States can only afford to do so much at this point in time, but the world’s energy supply is important for its ability to continue to produce a sufficient amount of oil and power for its own needs.