wolfstreet.com / by Wolf Richter / January 29, 2015
Oil, pensions, and a new jail sink Kern County.
Crude oil plunged 4% on Wednesday, with West Texas Intermediate now at a new multiyear low of $44.36 per barrel. Consumers love the cheaper gasoline, and they’re saving their money, and some of them are shifting it to iPhones, food, and whatnot. But the economic consequences of the collapse in oil and natural gas prices are ricocheting around the largest hydrocarbon producer in the world, the USA.
Kern County, which includes the city of Bakersfield, is considered the oil capital of California. Its Midway-Sunset oil field amounts to about 4% of US oil production. The local crude oil grade, Midway-Sunset, traded for $101.87 in June 2014. Chevron’s Price Bulletin on January 28 priced it at $38.94. A 61% plunge.
The oil and gas sector in Kern County, as elsewhere, has responded to the new pricing reality with layoffs.
“If it continues and you see more of the layoffs, you’re going to definitely see it trickle down,” fretted Melissa Rossiter of the Greater Bakersfield Chamber of Commerce onKBAK TV two weeks ago.
“We’re probably looking at about 24,000 jobs,” guesstimated real-estate appraiser Gary Crabtree. “It just dominoes to everything … New construction may be affected,” he said. “We’re just waiting for the next shoe to drop. I think everyone is just holding their breath. Probably the only ones that are panicking at this point in time is the government.”
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