Yeah I know, boo hoo, cry me a river, Houston millionaires are getting hurt by low oil prices. However, if they are getting impacted – and they are – then middle and working class people with jobs in or related to oil are getting slammed.
I worked in the oil fields in Midland-Odessa in West Texas in the mid 1970’s. The economies of both depend very much on oil drilling and oil support businesses. The two cities have a total population of about 250,000 and there’s not much else for many miles. If Houston is catching a cold because of low oil prices, then Midland-Odessa is getting pneumonia. You may hate the oil industry but remember, these are real people whose economic situations just got real dicey.
From the Midland Development Corporation:
We have preliminary factored industry employment loss into the Texas Permian Basin Petroleum Index, and some extrapolations from the quarterly employment and wage data suggest the loss of nearly 9,000 oil & gas jobs in Midland-Odessa alone through December. That is a decline of close to 25% compared to December 2014 when industry employment peaked before beginning to fall.
Ouch.
In part oil company executives got whacked by their own greed, because of course stock prices were going to go up forever. Until they don’t and start going down. Which of course is something no one could have possibly predicted.
Since U.S. lawmakers passed a law in 1992 encouraging “performance-based” pay, the share of stock options in executive compensation has steadily increased, said David Bixby, head of the Houston office for Pearl Meyer compensation consultants.
“Now, you’re looking at 70 to 80 percent of CEO compensation in stock on average for oil and gas companies,” he said
This can be a double hit if you’ve used the stock as collateral for loans. And it looks like oil prices will be low for quite a while.