Consumers happier, but crude slide bad for oil companies…and impact on Manufactured Housing?

oil-rigs-credit=Jim WilsonTheNew YorkTimes-posted-daily-business-news-mhpronews-com-A steady drop in crude pushed by OPEC has been popular for consumers, but not for the oil producers and related companies. Like a domino effect, oil companies around the world have cut back on production, investment and their workforce. The New York Times (NYT) tellsMHProNews   that the day American oil benchmark traded around $63 a barrel, ConocoPhillips announced it would cut investment spending in 2015 by 20 percent. That’s the biggest sign yet that major oil companies are contracting.

Since July 2014 the price of oil has dropped an estimated 40%. Ryan Lance, ConocoPhillips’s chairman and chief executive said: “We are setting our 2015 capital budget at a level that we believe is prudent given the current environment.”

The announcement came on the heels of BP’s notice that it would cut middle management and other jobs in the months ahead.

NYT reports another wrinkle.  The slow decline in drilling rigs deployed in fields worldwide means that whatever hopes Saudi Arabia and other OPEC producers have that lower prices will lead to quick production declines are unlikely to happen before late 2015. The 12 member OPEC cartel decided last month to keep production steady, accelerating the oil price drop. 

While U.S. consumers may benefit to the tune of half-a-trillion dollars a year in more disposable income, oil and gas related jobs have been helpful to manufactured housing.

For example in Oklahoma, monthly energy tax revenue in November declined from the year before by more than 5 %, the first decline in two years.

Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin said: “This is what commodity markets do, they go to high price, and high price inspires new production and also inspires consumers to use less. After a couple of years of that, prices collapse. Then low prices inspire consumers to consume more and encourage suppliers to turn off production. Then you get a supply shortage and prices go back up.”

The bottom line at present seems to be that the impact of sliding crude may boost disposable income nationally for consumers. That could help manufactured home sales, and lower shipping costs of homes to markets. But the slide of crude may cost sales more closely tied to shale in ND, TX, OH, LA and OK. ##

(Photo Credit: Jim Wilson/The New York Times)

joseine-josie-thompson-writer-daily-business-news-mhpronews-com50x50-Article submitted by Josie Thompson to – Daily Business News – MHProNews.

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