The horrible consequences for Montana’s petroleum industry is yet unseen, but still certain. Although rebounding is not an impossibility, just as the New York Stock Exchange has seen drastic rebounds in the last two weeks of rallies, an upward tick that’s fast enough to stave off mass lay-offs and negative market consequences isn’t likely. Today, Montana oil producers were hit like Pearl Harbor.
By the end of trading today, oil prices were at their lowest price in world history. Settling in at a whopping negative $37.63, producers would have to pay traders to take their production. If this price stabilizes, or anything close to it, that means that even wells that were drilled decades ago will likely be capped because companies would lose money to transport the oil to refineries.
Oil industry leaders are claiming that today’s crash of oil reflects world market conditions unrelated to the coronavirus pandemic, such as conditions presented by Saudi Arabia and Russia, but that decreased demand for oil because of coronavirus has been the straw that broke the camel’s back. Simply put, the futures market has dried up for early summer projections, as nations have ‘sheltered-in-place’ to save lives, which is proving to kill their economies.
Although most would have predicted a continued downturn in oil prices over the course of national lockdowns, no one predicted Monday’s crash would be as bad as it turned out to be, what at least one oil executive called “an oddity” and another called “a nightmare.”
Democrats, who have done everything possible to cripple the petroleum industry for years, are now blaming Donald Trump for not doing enough to save the industry in the wake of the Wuhan Virus. Some have suggested that the president propose funding oil companies in order to keep them solvent during the crisis, which has not comforted oil executives whose industry in many ways is more profitable and solvent than the Federal Government. Whereas other companies have been said to be “too big to fail,” the gargantuan oil industry is probably too big to bail out.
The bulk of Montana’s oil production comes from Eastern Montana, centered in Richland County, just on the western edge of the Bakken Oilfield. Providing millions in funding to the Montana state budget, many millions more to local industry, and providing thousands upon thousands of jobs, the future remains very uncertain.
Governor Bullock has yet to respond to today’s oil plummet, which has the potential of affecting Montana’s budget as horribly as his economic shutdown of the rest of the economy.