I've talked to a lot of people lately who are coming to the North East part of the state for work. Many of the jobs are paying well, offing reimbursement for travel and lodging, and in many ways seeming too good to be true. There has to be a reason for it right?
When I first talked to the project manager where I work I asked him how long he expected the job to last. "It's oil and gas," he said, "if the price goes down we could be done tomorrow. But I just moved my wife and 2 kids up for Texas if that tells you anything. I expect to be here for a decade." Well that made me feel a little better. The fact that it could dry up though didn't. Then there's the possibility of regulation. So what exactly IS the future here in Ohio?
First to price. An article on wealth wire, a website devoted to helping investors lift the veil on financial markets, says that the market for natural gas is underrated. We're drawn to the big numbers in crude, and ignore all the movement going on in gas. A Chinese spent billions of dollars for a 1/3 stake of the Eagle Ford, and a Norwegian company spent over a billion to start a joint venture in the same formation. Exxon, the largest publicly traded oil company by market value, recently spent 25 billion to acquire XTO Energy. Exxon also stated that they expect the shale markets to increase five-fold in the next five years. All of that makes me feel good about price. The big boys are investing lots of money. That means they expect to make that money back, and they won't make it back if the price bottoms out.
Not that it's all sugar plums and unicorns on price. At least not to my entirely ignorant eyes. The U.S. Energy Information Administration gives weekly reports on prices, storage, consumption, and all those other stats that mean people who know how to read them the right way. What I could garner is that prices are down, active rigs are down, and storage is up. None of that means mountains of money to me. The only bright side is that consumption looks to be up a little. Well that and that everything is losing money. The fall in price was pretty consistent with the devaluation of the rest of the market. And honestly, slowing the growth may not be such a bad thing.
An NPR story called "How to Avoid the Oil Curse" advocated going slowly in the extraction of oil. Now a lot of the parallels are a stretch, but the impact on the local area, especially the local economy, seems to be hedged simply by slowing it down. Now Norway managed to slow things down through....yep Regulation.
What is the future of regulation of shale drilling in Ohio? Well this article pretty much summed it up for me. This past Summer the state of Ohio decided that they would lease the state parks to oil companies for drilling. They're expecting half a billion dollars in return. Now we don't have to look far at the moment to see states, or nations, in budgetary problems. While $500 million may not be a game breaker, it's certainly worth considering. That money, however, is not the only revenue the state is expecting. Gov. Kasich focused on the economic revitalization this could mean, which of course means more tax revenue. Estimates are that the Utica formation could add up to $15 billion dollars of value to Chesapeake as well, and part of that would be taxed by Ohio as well. Even community meetings held out of concern for fracking can't escape the governments support of the oil and gas companies.
So are the jobs going to go anywhere? No, I don't think so. Ohio is very much on the side of the companies. Between being a Republican controlled government hooked on the "Drill baby drill," mentality, the money that should flow into the coffers at the perfect time, and the boom in jobs for the Rust Belt it seems very unlikely that politicians are going to step in and make any changes any time soon. The prices of oil and gas are always more volatile. I don't really understand them, I can't predict them, and nothing they could do would shock me, but I DO have a degree of faith in how the giant companies spend their money. The billions of dollars being invested say that the guys and gals who make their living by knowing this stuff think there's money to be made. And as long as there are billions to be recouped, there will be jobs and work.