By Wyatt Goolsby
First there's the boom, now there could be a bust. Oil companies are shutting down rigs, leaving workers without jobs. Some new numbers released on Friday are showing how weak energy demand is slowing down activity in the oil fields.
It may be as simple as supply and demand: A big drop in the price of oil means companies are forced to shut down rigs. After looking at numbers released by Baker Hughes on Friday, the Permian Basin has taken a big hit over the past year.
In Texas Railroad District 8 in March of 2008, 129 rigs were in use. Now, it's 54, more than a 50 percent drop. In the last week, ten rigs have shut down.
The Lea County, NM numbers don't look much better. Companies have started up two oil rigs in the last week, but that only brings the total to 11. Compare that to 26 active rigs from one year ago. Local Midland oilman Jim Henry, CEO of Henry Petroleum, said there are two reasons why more rigs are closing down.
"The drop off in the rig count is because we don't have any money," Henry explained. "The oil companies don't have enough money to drill the wells. With 40 dollars a barrel, we're getting much less than half of what we got last year. So, we have prices coming down slightly for drilling the wells, but the price is still up pretty high, and we only have half as much money as last year."
Henry said it's just not economical right now to do more drilling.