Rollercoaster Economy Hits America's "Oil Country" Hard

A few short months ago oil was at an all time high approaching $150 per barrel. While the rise at the pumps stung most Americans, there was one part of the country that didn't mind seeing the price of oil and gas fly up. It's referred to as "Oil Country" and it has been hit hard by the rollercoaster economy and the lowering in oil prices.

It's obvious why oil has gone down in price; people are using less of it. The reasons why are simple, no money to fill the tanks of the big SUVs and trucks, less traveling and overall less consumption means no high demand for oil. While the rest of America is breathing at least a temporary sigh of relief because of the drop in oil and gasoline prices an interesting and unfortunate ripple effect is going on in places that produce oil in America like Texas and Oklahoma.

Since August of last year, the number of active oil and gas rigs in America has dropped off by more than 20 percent from 2,031 to 1,589 as of January 9th. Texas has been hit the hardest going from 958 active rigs down to only 713 earlier this month. Many more are expected to cease operations as well when the contracts that they have with the energy companies expire (source: news.yahoo.com).

The reason behind the huge drop is of course money. 90 percent of the oil and gas rigs in Texas for example are run by independent operators. These are run by companies that do not have the bank roll of the big oil companies and must rely heavily on funding from outside investors. With the price of oil and gas declining it is becoming increasingly more difficult for these smaller companies to obtain the funding necessary and thus they have to cease their operations (source: news.yahoo.com). And with ceased operations comes lay-offs.

Gone are the days when a hotel room in Midland Texas was near impossible to get during the week. Gone are the constant jobs available for anyone who was willing to put in a hard day's work as a "roughneck (person who works on an oil and gas rig)." And gone are the days of the $2000 per week paychecks for those roughnecks. Now many are forced to look elsewhere for work as the rigs that are still operating are not hiring (source: news.yahoo.com).

Industry experts don't expect things to get any better until the price of oil reaches at least $70 per barrel (source: news.yahoo.com). But who knows if and when that will happen. Until it does, America's "Oil Country" will continue to be like the rest of the country; longing for the "good old days" and taking whatever job comes their way.