Oil prices have fallen below $40 a barrel for the first time in more than a year and are expected to remain in the $30 range for the foreseeable future.
It’s a sobering reminder that the oil and gas industry is facing an existential threat and that its survival hinges on keeping prices low.
But as the Trump administration moves to reverse a decades-long decline in oil prices, oil execs are scrambling to prepare for the day when they can no longer afford to buy the stuff they depend on.
“I’m not going to be able to buy oil anymore,” said Marc Woodard, a veteran oil executive who is leaving his $5.7 million annual salary to help with a company that plans to move out of the industry in 2019.
“It’s going to come crashing down.
I’ve been through this.
This is a scary situation.
It will be my last day.”
The decline in global oil prices has been particularly dramatic since the beginning of this year, when prices reached record lows in mid-2014.
After bottoming out in early 2015, oil prices rose to $125 a barrel in early 2016, then to over $140 a barrel by early 2017.
That’s when the US Energy Information Administration reported the world was on pace for a $20 trillion surplus by 2019.
The US economy is still growing, but oil prices have been falling as the cost of producing the oil has increased, pushing the US dollar higher and forcing producers to seek cheaper, cheaper imports.
“The world is on track for an $80 trillion surplus in 2019,” the EIA said in a recent report.
“Oil production is expected to grow to about 7 million barrels per day by 2020, which would be the largest annual production increase since the 1970s.”
The EIA also estimated that the global supply of oil is set to grow by about 1.6 million barrels a day by the end of this decade.
“We are now at the point where we are looking at a global surplus in the next decade,” Woodard said.
“That means we’re not going through a recession, which is something that we’ve had before.”
And the price of crude has already been falling dramatically over the past year, according to the International Energy Agency.
Oil prices are expected fall to $25.60 a barrel on Monday.
As long as oil prices are low, the oil industry is prepared to make do with the cheap oil it has, Woodard added.
But the drop in oil is making oil executives and analysts more nervous than ever.
The oil industry has been hit hard by the falling prices, with production and prices plummeting for several months at a time.
“If you look at what’s happened with the market, it’s actually a little bit scary,” said Doug Oberle, CEO of Woodard Energy, a company focused on producing natural gas in Pennsylvania and Texas.
“People are making investments to get rid of the rig, to get the equipment off the ground, and now they’re not investing.
So, I think there’s a real risk that it’s going, ‘Wait a minute, maybe we don’t have the rig.'”
The company recently announced that it would lay off about 70 percent of its workforce.
“Some of the folks have left, some of them have left,” Oberle said.
He added that he expects the layoffs to be less severe than some others that have left over the last several months.
The cuts were necessary to get more gas to market, but not enough to make up for the lost production that was taking place, Oberle explained.
“To be honest, it doesn’t make sense,” Oberlesaid.
“You’re trying to produce gas, but you’re just not getting as much as you need to get it to market.”
“There’s always been a risk that the industry would just sort of fade away,” said Kevin Rushing, an energy expert at the Institute for Energy Economics and Financial Analysis, a Washington-based research and policy organization.
But over the years, the industry has managed to keep prices low by cutting production in response to the price drops.
“In fact, it was actually in response that we started to produce in such large quantities that we could actually make the economy work,” Rushing said.
The rise in the price was partly driven by the shale boom, which has pushed prices to record highs, and by the rapid expansion of renewable energy.
As more of the world’s oil comes online, the energy industry has taken steps to cut emissions, particularly from burning coal and natural gas.
The United States alone is responsible for more than half of the global greenhouse gas emissions.
But a growing number of companies are finding ways to use renewable energy to help reduce emissions.
Last year, Shell announced plans to build a new nuclear power plant, and Duke Energy said it is considering using a wind farm to generate electricity for electric vehicles.
But while many companies are starting to look at renewables, the fossil fuel industry is still relying on oil to