Booming oil industry brings prosperity, caution

From the new houses and businesses under construction to cars being driven off the dealers’ lot to retailers’ cash registers ringing, Midland’s economy has thrived in 2005. As Amarillo Economist Karr Ingham has stated multiple times this year, that activity is due to the cash flowing from the Permian Basin’s dominant industry, oil and natural gas.

But ask local oilmen if the current climate of crude oil near $60 a barrel and natural gas in excess of $14 per thousand cubic feet constitutes a new energy boom, and their responses are cautious and guarded. Except for the fact that they don’t like the word “boom,” levels of optimism are as varied as the oilmen themselves.

..”Prices are up, but the cost of drilling has risen 50 to 60 percent in my operations over the last year,” he explained, adding availability of service companies is tight, allowing service companies to raise rates. Just recently, he noted, he turned loose two rigs because the prospects didn’t justify the drilling rates.

…”We are really on the downside of peak production in most of our domestic fields,” he said. “It’s an urgent situation, but data shows that supply will never meet demand, at least from our own country. There will truly be global competition for oil and that will keep prices up. A U.S. economic downturn won’t reduce oil prices.”

My West Texas