Tags: Schork | oil | job | losses

Stephen Schork: Oil Industry Is in 'Dire Straits'

By    |   Tuesday, 13 January 2015 08:59 AM

Plummeting oil prices will lead to significant U.S. job losses, says Stephen Schork, editor of The Schork Report.

"The industry is in dire straits at this moment," and it's an industry in which workers are paid more than twice the $850 weekly average for the private sector as a whole, he tells CNBC. A salary of $1,700 per week translates to $88,400 per year.

The Dallas Federal Reserve predicts the Texas energy sector might lose about 125,000 jobs by the end of June, Schork notes. "That is a significant hit to the economies of Texas and to the general economy."

But a lot of jobs are safe through 2015, because many drilling projects already have been financed. "You're going to keep people employed just to help service the debt that's in there," he explains.

"But once those sunken costs are mitigated, which you're starting to see in the capital expenditure budgets for 2016, 2017, that's when the other shoe begins to drop. . . . This is about to be a rude awakening for a lot of people out there."

Goldman Sachs and Societe Generale analysts lowered their oil price forecasts this week.
Goldman predicted West Texas Intermediate will fall to $41 within three months, and SocGen reduced its average WTI price for this year to $51 a barrel from $65 previously.

"In a violent move like this it's impossible to pick the magic number that's the bottom," Katherine Spector, a commodities strategist at CIBC World Markets, tells Bloomberg.

WTI fell below $45 a barrel Tuesday due to speculation that U.S. stockpiles will increase.

"Prices continue to free-fall and there is little that can stop them," Amrita Sen, chief analyst at consultants Energy Aspects Ltd. in London, said in a report, according to Bloomberg. "OPEC remains the only factor that can stabilize markets in the short term. But with the group out of the picture, the market is looking elsewhere for a tangible reaction."

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Plummeting oil prices will lead to significant U.S. job losses, says Stephen Schork, editor of The Schork Report.
Schork, oil, job, losses
Tuesday, 13 January 2015 08:59 AM
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