A recent story on NewsOK.com makes the obvious point about the massive loss of value of energy companies here in Oklahoma given the worldwide glut of fossil fuels.
The basic point is that when there’s a glut of oil the price for oil drops, and then the value of the companies that extract it also declines. Duh. While the numbers might be important—a $113 billion drop total for companies in Oklahoma—the article itself doesn’t shed any real light on the fundamental problematics the vaunted energy industry has brought to this state since statehood.
Here’s the caveat statement: Oil and gas companies are really important to the Oklahoma economy. Here’s the reality statement: Oil and has companies are TOO important to the Oklahoma economy.
The story does mention diversification in terms of personal and institutional financial investment in energy stocks, but it doesn’t really tackle the thorny issue of why oil and gas companies here are unable to plan production amounts in a reasonable manner. The boom and bust cycle brought to us by our romantic swashbuckling wildcatters the conservatives love so much—primarily, old, conservative white men—has made this state’s economy a crazy roller coaster that never stops.
The most obvious reason oil and gas companies don’t forecast price amounts appropriately is greed, and that’s not hyperbole. Let’s say there’s a boom on because of a refinement of extraction techniques, such as hydraulic fracturing and horizontal drilling. Loan money is flowing from banks protected by everyone’s tax dollars. Drill, baby, drill. Why care about the future as the crude accrues? It’s human nature. The big shots at the oil and gas companies making the decisions are earning millions or even billions of dollars. They have nothing personal to lose on the reality level when it comes to their standard of living when the boom goes bust as it always will until the last drop of oil is sucked from the ground or until global warming because of the burning of carbon emissions destroys the planet.
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