JP Morgan: Texas at risk for regional recession in 2015

[Winehole23]

While cheap gas is likely to be a net positive for the U.S (http://money.cnn.com/2014/12/17/news/economy/janet-yellen-fed-oil-prices-good/index.html?iid=EL)., Texas is poised to take a hit because of the pivotal role that oil plays in the state's economy.


"We think Texas will, at least, have a rough 2015 ahead, and is at risk of slipping into a regional recession," Michael Feroli, JPMorgan Chase chief U.S. economist, predicted Thursday.
Texas has become a dominant oil producer, boosting its share of U.S. crude production from 25% to more than 40% over the past five years.


That heavy exposure to crude should go from a big positive to a big negative. Crude oil traded above $100 in June. Now the price is about half that at $54.

http://money.cnn.com/2014/12/18/news/economy/texas-oil-recession/index.html?iid=HP_LN

[TeyshaBlue]

Traditional oil production, which is still the majority of oil produced, will make money @ $30/bbl. I don't see the recession tbh.

[angrydude]

This dumping isn't going to last. Oil will be back to $100 a barrel in a year or two. This isn't the end of the world.

[Winehole23]

Traditional oil production, which is still the majority of oil produced, will make money @ $30/bbl. I don't see the recession tbh.Why would JP Morgan say otherwise? Presumably they've got good number crunchers. What's their angle?

[angrydude]

Why would JP Morgan say otherwise? Presumably they've got good number crunchers. What's their angle?

Why is CNBC always wrong? They only look at what is happening today and project it out forever.

[Winehole23]

Shortsightedness? Why not? Predictions are a dime a dozen, most of not even worth that.

[ElNono]

Why would JP Morgan say otherwise? Presumably they've got good number crunchers. What's their angle?

They're also extremely good at market manipulation...

[Winehole23]

hence the question...did they make a bad bet, or are they pushing a good one?

[ElNono]

hence the question...did they make a bad bet, or are they pushing a good one?

I'll take cynicism for 100, Alex...

[boutons_deux]

hence the question...did they make a bad bet, or are they pushing a good one?

months before the oil price cratered, I read that all the biggest Wall St oil traders had gotten significantly out of the oil market (as if they insider-ly knew well in advance where the price was going)

remember the oil exec that testified in Congress that about 30% of the high price of oil was the "speculators' tax".

[boutons_deux]

the Red Queen:

BRUCE BULLOCK: Four out of every 5 wells that are drilled are actually to keep production constant.

BULLOCK: These leases that a lot of these companies have entered into require them to actually drill to hold those leases.

GOODWYN: That's to keep the major oil companies from buying leases they don't intend to use just to keep them out of the hands of competitors. Shale leases are like money in the bank, so producers do what's necessary to hold onto them, including drilling when price might dictate otherwise.

The coming year is likely to see a weeding out that culls the weakest Texas producers. But for the rest, drilling and production is likely to continue at somewhere between 70 to 80 percent of the current rate, as they wait for the inevitable rise in oil prices. But nobody knows how long that wait is going to be.

http://www.npr.org/2014/12/15/370878785/texas-braces-for-a-drop-in-production-after-oil-prices-fall

[CosmicCowboy]

Texas WILL be affected. We have been here before and seen the results and it's ugly. The oilco's will continue to make their margins by squeezing the supply and subcontractor chain. They will use the "slowdown" to play vendors against each other and the vendors will squeeze their employees and supply chain. At $100 oil there was room for everyone to get fat...At $50 oil the oilco's will keep punching holes but there WILL be major cutbacks and we will feel the trickle down throughout the economy.