NYT: US Prodcers Cut Rigs

Good article in the New York Times which shows how the current drop in the price of oil is affecting US oil producers.

Some interesting excerpts.

The first one shows just how much production has dropped and how it can affect employees working for these companies.

As for the industry, the signs of retraction are clear. The nation’s rig count, a barometer of oil exploration and production activity, fell by 26 in the week that ended Jan. 2, following a drop of 16 the week before, according to the Baker Hughes service company.

Mr. Triepke predicted that over the next six months, the big three land drilling companies — Helmerich & Payne, Nabors Industries and Patterson-UTI Energy — are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ.”

Layoffs might not come immediately however:

Even with the reductions, though, large-scale layoffs across the industry are not expected, at least not immediately. Producers contract their rigs for as long as three to four years, and many companies have hedges that lock in higher prices than the going market rates. In addition, producers often need to drill simply to retain their leases or keep their revenue up.

The final excerpt shows just how many people are directly affected by the drop in crude. 

Nationwide, the oil industry employs about a million people, including extraction, pipeline construction and refining, and the boom has added about 150,000 industry jobs over the last three years, according to Citi Research.

The affects of lower oil will not affect employees working for these oil companies only.  It will hurt the new restaurants, bars, grocery stores, etc. that have opened to accommodate all of these people.