The coronavirus pandemic takes all the space in the news but one little talked about story is the price of crude oil. So many well-paying jobs are counting on oil extraction in the Permian Basin. With the current price of $22-23 a barrel, most companies are drilling for “free”. Shale extraction is very expensive and companies need oil to be at least $46 a barrel just to break even. It was not quite a month ago that Russia declared war on Saudi Arabia and decided to increase its output. With half the world on lockdown status due to the pandemic, the supply for oil is much greater than the demand. We all love to pay as little as possible at the pump but if this oil price crisis continues for several months, many companies will go under along with their well-paying jobs.
It is expected that 15% of the companies will be insolvent with oil less than $40 in less than 12 months. In Canada, it’s even worst. Their oil is just over $8 a barrel and it needs to be over $60 to break even. Expect big financial trouble in Alberta if the crude oil does not significantly go up. If this goes on longer, it will be 25% of them. For more news about this topic: https://oilprice.com/Energy/Crude-Oil/Is-This-The-Beginning-Of-The-End-For-Texas-Oil.html