we wrote about Anadarko, Colorado’s largest oil driller, planning to cut capital spending around Weld County by up to 25 percent this year, and reduce its drill rigs by a third. The Denver Post reported that's part of a larger pattern among drillers across the state.
That's why a recent High Country News from Jonathan Thompson caught our attention. He recently attended a workshop for workers in the western oil economy at San Juan College in Farmington, New Mexico, called "Thriving in the New Normal."
There, Daniel Fine, from the New Mexico Energy Policy Center, offered "a grim speech" assessing the state of the domestic energy industry. Along with the boom in domestic production brought about by domestic fracking, Fine says OPEC is playing a key role in lowering U.S. oil prices, and putting stress on domestic drillers.
During the summer of 2014, oil prices began to ebb slightly as global supplies caught up with and then exceeded global demand. It was the window Saudi Arabia had been looking for, and rather than curtail production to stabilize prices, as many expected the nation to do, it continued to pump oil at a high rate, even going so far as to offer discounts to Asian nations.
And then, as the Wall Street Journal has reported, there are the major oil traders buying up cheap oil and storing it in megatankers at sea. Here's Thompson again:
This helps prop up demand now. But when prices go back up — even by a relatively small amount — the brokers can sell all that oil at a huge profit. Doing so will flood the market with oil, pushing prices right back down, perhaps even lower than they are now.
"Will oil rebound to $100" a barrel, Thompson reports Fine asking, rhetorically. "I’m here to say no."