The plunging price of oil is creating a wave of destruction all over the world. From Canada to Russia, from the United States to Saudi Arabia, governments and companies are crashing, and the worst has yet to come.
In addition to a Morgan Stanley report released this week, which said the price of oil could tumble to $20 a barrel and is in a worse situation than in 1986, a new report says a large number of firms could fold.
According to MarketWatch, citing a report from Wolfe Research, one-third of U.S. oil and gas producers could file for bankruptcy and face restructuring by the middle of 2017. The only way these companies could survive in the short-term is if oil prices rebounded to a minimum of $50 – for countries like Venezuela it has to go a lot higher than that.
It’s reported that close to three-dozen small companies with a collective debt of $13 billion have already filed for bankruptcy protection thus far.
This comes as oil giant BP announced it would be slashing around 4,000 jobs in its exploration and production departments for the next two years, citing the immense drop in crude oil prices.
“It is equally vital that we continue to manage our costs down using all levers available to us,” BP CEO Lamar McKay said in a statement. “I am very much aware of the impact these headcount reductions will have on many of you and your families. We will treat individuals affected by these proposals with care and with respect.”
Not only do you have the crisis in China and weak global economic growth, you have an oil crisis causing job losses everywhere.
At the time of this writing, oil is trading at a record-low $31 a barrel.
The world needs to wake up and realize it is time to move away from an oil driven economy over the next 20 years. Wind, Solar and battery storage for power is a much better way to go. Electric cars, trains and buses for city travel are much cleaner. All transportation of less than 50 miles should be on electric power.
So the biggest financial bubble in the entire globe is about to pop.
Consider all those companies that use petroliumin their products as many consumer products are made in composits and plastics.
Get Prepared, its going to get rough at the least.
As we move away from oil as a transportation fuel, it will be cheaper for plastics manufacturer’s, a good thing.