Son of Oil Bust

MY WEST TEXAS FRIEND, WHOSE FATHER HAD been in the oil business and who by now had been in the oil business himself for nearly forty years, was gloomy, gloomy, gloomy. “I’ve never seen the Permian Basin this quiet,” he said. “Watch the rig count. That’s the main thing to watch, and the rig count in the Permian Basin has never been so low. There were only twenty-seven in Texas last week versus over one hundred this time last year. It didn’t get that low in ’86, and we thought that was awful. Now we are going to see something we are not familiar with. Now we don’t have second-tier companies who will absorb whoever is laid off from the bigger ones. It’s a real fundamental change. You can’t just hunker down and get through it. This isn’t a bunch of guys who were overspending. I don’t care how conservatively you manage your business, you can’t make it if your product is suddenly worth half what it used to be. I know a man who laid off his son. You know it’s rough when you lay off your son.”

The news of the huge merger between Mobil and Exxon highlighted the equally important news that the price for a barrel of oil was in a free fall. For ten years the price

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