Light at the End of the Tunnel for the Struggling Oil and Gas Industry?3.14.16
It has been tough going for the oil & gas industry, with a roughly 70-percent collapse in oil prices over the past 20 months. The booming energy industry in Texas has been forced to reign in spending. Job losses have left many workers and their families in doubt and in flux. Fortunately for them, Kozi Corporate Housing offers an ideal solution for temporary and medium-term housing needs.
Between November 2014 and November 2015, the state lost nearly 60,000 oil & gas jobs. While there were 900 rigs actively drilling for oil & gas in the state in late-2014, that number now stands at under 240 rigs according to data from Baker Hughes. West Texas Intermediate (WTI), the US benchmark oil price, steadily traded above $90 per barrel from early-2012 through late-2014. Things began to take a drastic turn for the worse in November of 2014. As of today, WTI spot prices stood at less than $40 per barrel – a notable rebound from less than $30 just the other wek.
The dramatic downturn in commodity prices has put many US oil & gas producers as well as oilfield services companies and related durable goods suppliers in financial duress. Since the beginning of 2015, at least 40 oil & gas producers have declared bankruptcy. Analysts forecast the potential for even more bankruptcy filings and layoffs. One analyst report suggests that one-third of US oil & gas producers could file for bankruptcy protection before mid-2017 if oil prices do not climb back up above $50 per barrel. An even more pessimistic outlook suggests that half of the nation’s oil & gas producers would go belly-up even if prices were to recover to $50 to $60 per barrel.
The Houston economy has enjoyed a boom and seen lots of new development during the last several years. This economic growth has been driven in large part by the production of unconventional oil reserves. A strong commodity pricing environment and investor thirst for big returns in the sector made many of Texas’ oil & gas producers flush with cash and able to make huge investments and increase employee headcount.
Today, Houston’s oil & gas industry is challenged by a weak commodity pricing environment, and the outlook for a recovery in oil prices and investment by oil & gas producers does not instill confidence. With an estimated $380 billion in upstream energy projects across the globe cancelled or delayed as a result of this price collapse, Houston’s energy firms and their employees have felt the pain.
Against this backdrop, the Houston economy as a whole has faired not as poorly as expected. The healthcare sector, in fact, showed strong jobs growth during 2015. The city’s housing market also showed resilience. Realtors in the Houston area sold nearly 74,000 single-family homes in 2015 after a record-breaking figure of approximately 75,500 during 2014. While home sales in the first three quarters of 2015 outpaced sales during the same time period in 2014, the market began to slow during the last few months of the year, with a 10% year-on-year decrease during the fourth quarter. Some analysts expect continued cooling of the Houston housing market.
The already large number of layoffs in the oil & gas industry and the expected future layoffs have have left many individuals and families wondering where to seek out new opportunities. Increased job security concerns have led many to reconsider whether to buy a new home. New arrivals in Houston may look for house prices to come down as the market normalizes, but do not want to commit to a long-term lease.
In these circumstances, fully-furnished apartments offer convenience and peace of mind. While waiting for the dust to settle, enjoy the comfort of a furnished apartment offering a home-away-from experience. Our corporate housing offerings include beautiful apartments, and will put you in many of the most desirable neighborhoods in Greater Houston. Enjoy the amenities and convenience that we deliver at all of our locations, including large-screen HDTV, high-speed secure wireless internet, in-unit washer and dryer, and all utilities paid. The Kozi Corporate Housing staff provides professional and courteous service, and we are ready to find the right match for your corporate housing needs in Houston and other major Texas cities. Contact us today to make your booking!