WTI Crude Price Dives Yesterday

The price of West Texas Intermediate crude took a pounding yesterday, dropping at one point below $79 a barrel. How will the price drop affect Texas?

oil dolly rigFalling oil prices are a double-edged sword for Texas. Like drivers across the country, Texans can expect to spend less on gasoline. But the less money crude commands per barrel, the less incentive oil companies have to go after supplies that are hard to reach.

Robert Dye is chief economist for Comerica Bank.

“It will likely result in marginally less drilling activity. I wouldn’t necessarily anticipate reductions or curtailments of employment in resource industries, but I would anticipate just them dialing back just a little bit here in terms of their activities to see where this price is going to go.”

Tim Evans, an energy analyst for Citigroup, says that oil prices were due for a correction and may have farther yet to fall.

“There are still some segments of the market that, in my view, are markedly overvalued.”

Evans says that oil prices have effectively been piggybacking on the stock market, masking an erosion of U.S. demand for petroleum. With markets tanking in the wake of Standard & Poor’s downgrade of U.S. debt, that mask has been ripped away.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...