Back to "Business"
Oil prices: Nowhere to go but up
By Scott Scholten
One of Abilene's economic mainstays has been millions of years in the making.
Abilene sits on the edge of a sea that dried up millions of years ago. Geologists call the area the Eastern Shelf of the Permian Basin.
The Permian Sea, an ecosystem rich in algae, eventually dried up after eons of dirt, sand, rock and other muck settled to the bottom, covering the algae.
Under enormous pressure from the rocks above, the algae fermented into billions of barrels of West Texas Intermediate-grade oil, the U.S. benchmark crude, and waited to be found.
Such map and guesswork activity lacks the glamour of "Dallas," the early 1980s TV series that once fascinated many Americans Friday evenings.
And it's a sore spot with oil producers. The show ran during the height of an oil boom, painting oilmen as fabulously wealthy.
But those were the days of $40 per barrel oil prices; $9 per barrel oil today just doesn't justify much oil exploration.
Yet oil producers are a practical lot, acknowledging they deal in a supply and consumption-sensitive commodity, and will say it's not really a matter of how cheap their product is on any given day that disturbs them.
Instead, they are concerned with how long these depressed prices will last.
Analysts and those in the industry feel near-term prices will stay low, be it due to an OPEC in disarray, warm winters or a government unwilling to levy import tariffs or install programs that prop up the price of oil.
But while oil remains inexpensive, small-scale oil producers who were already just scraping by, and even those of moderate economic health, teeter on the edge of economic disaster.
Nonetheless, oil production is a resilient enterprise and the industry will drill away again, once oil prices return to profitable levels, which industry experts say will happen.