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Crude oil prices have plummeted in recent days after Saudi Arabia and OPEC indicated that they aren't in any hurry to decrease production. While that might mean cheaper prices at the pump, it could also become an issue for the oil industry here in Texas.
If oil prices start to fall too far, this could force producers to begin shutting down their drills. Jay Young, CEO of King Operating Corporation, explained that, "It’s just not economic because it costs so much money to get it out of the ground. Oil and gas producers will take rigs off the market if prices don’t come up."
Essentially, while this massive drop-off may feel nice at the pump, it could be a major problem in the long run. So where is the sweet spot? According to Young, the ideal price for both consumers and producers is somewhere between 70 and 80 dollars a barrel.
He said, "That’s ideal in this marketplace. It supports investment returns for oil and gas companies, but it’s also a healthy balance for the economy."
Thankfully, there isn’t really any need to start panicking. Young thinks that as the summer travel season gets closer, prices will start to climb again. He said, "We feel like we’re at the bottom right now, and as we go through this bottom, we’ll start seeing prices come back up. And that’s why you buy low, sell high, right? You drill when prices are lower."