Here’s an explanation by T. Boone Pickens of the current crude-oil situation, in four sentences: Prices are down from their $100-plus highs not because of OPEC but because, thanks to advances in fracking and horizontal drilling, the U.S. has oversupplied the market. However, the price will bounce back from below $50 per barrel into the $90-$100 range again in 12 to 18 months. The reason: excess oil inventories will hit all-time highs in 2015’s first quarter, leading many of the country’s 1,500 oil-drilling rigs to shut down. That in turn will crimp production, spurring the price turnaround by the third quarter.
While “the guy on the street doesn’t give a damn about the oil industry,” the average person is happy that gasoline prices have dropped, Pickens said. But he added: many people will give a damn about the industry in Texas, where it’s been a jobs and spending generator. The temporary downturn will hit the Houston and San Antonio economies a lot harder than those in Dallas and Austin, he believes, and Midland will really feel it: “It will take two barbers to shave a guy, because they’ve got some pretty long faces out there. But, they’ll be back in a year and a half.” The energy mogul made the comments in Dallas yesterday during an interview by David Johnson of KRLD 1080 FM for the YTexas CEO Spotlight Series.
