Tag Archives: Keystone Pipeline

Crude price drop triggers major layoffs in US oil industry

Thousands of recently highly paid workers have been laid off after the oil price plummeted 50 percent in 2014. At least four American oil-producing states are already facing budget problems due to decreasing oil revenues.The price plunge has affected petroleum production in all oil-extracting countries, including the US.

READ MORE: Putin says US and key oil producers may be equally interested in lower oil

Currently cheap fuel is still believed to be providing an overall boost to the US economy, as consumers can spend less on gasoline and more on shopping and services. But for the American energy sector the future looks less bright. It’s effecting places like Alaska, Louisiana, Oklahoma and Texas, the New York Times reports.

US oil experts recall the 1980s oil price downturn, accompanied by economic disasters around the globe and arguably becoming one of the causes of the fall of the Soviet Union. Some experts are positive and say America’s oil-producing states won’t suffer too much because they “diversified their economies.”

READ MORE: Oil producers to lose $1tn if price below $60 – Goldman Sachs

READ MORE: OPEC decision will keep oil prices low & hit Russia, Iran, US – experts

This doesn’t apply to the state of Alaska. According to the NYT, approximately 90 percent of state’s budget is formed from oil revenues. Alaska’s government is considering a 50 percent capital-spending cut for bridges and roads in the face of the oil price drop, with Moody’s, the credit rating service, lowering Alaska’s credit outlook from stable to negative.

The state of Louisiana’s 2015-16 budget is going to be $1.4 billion short, with 162 state government positions already eliminated and more to be discontinued starting from January. Contracts and projects are being either reduced or frozen in state agencies. According to the state’s chief economist Greg Albrecht, for every $1 fall in price of an annual average barrel of oil, Louisiana loses $12 million.

READ MORE: Saudi Arabia braces for $39bn deficit, to cut wages due to low oil prices

For Texas, which has a far larger and more diversified economy than Louisiana, the oil price downturn is no good either. In just October and November Texas lost 2,300 oil and gas jobs, the federal Bureau of Labor Statistics reported last week. Through the last half a year the state has been losing $83 million in potential revenue every day, the Greater Houston Partnership recently reported. They blamed this on crashing price of its West Texas Intermediate crude oil, which has depreciated to $54.73 per barrel this week, from more than $100 six months ago.

READ MORE: $20 oil wouldn’t force production cut – Saudi oil minister

The situation in other oil-extracting states could be even worse. In a study published last year, the Council on Foreign Relations warned the largest job losses caused by sharp decline in oil prices are going to take place in North Dakota, Oklahoma and Wyoming, where the number of drilling rigs is decreasing.

READ MORE: Obama: Keystone XL pipeline does not benefit Americans

The US oil industry has showed 50 percent employment growth since the recession officially ended in mid-2009, giving jobs to over 779,000 people as of October 2014, the Wall Street Journal reported. A total of 10 million jobs have been associated with the US oil and gas industry, Mark Mills, a senior fellow at the Manhattan Institute, estimated.

Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs.

READ MORE: Richard Branson: S. Arabia attacking renewable energy with cheaper oil

These workers can earn more than $1,700 a week, much higher than the average $848 a week payment for other workers, the WSJ reported. When experienced workers lose their highly paid jobs, they stop paying their bills.

There are also fears of a house-price slump. Fitch Ratings has already warned that with the price of oil continuing to plummet, home prices in Texas “may be unsustainable.”

 

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Hundreds arrested at Keystone XL White House sit-in protest

Environmentalists rally and pretend to be dead on a black sheet symbolizing an oil spill as they rally in front of the White House and call on President Barack Obama to reject the Keystone XL oil pipeline, in Washington, March 2, 2014

Several hundred people have been arrested during a peaceful protest in Washington DC after they strapped themselves to the White House fence and laid out their demands on Pennsylvania Avenue in protest against the proposed Keystone XL oil pipeline.

The activists, mostly university students started their march at Georgetown University and headed towards the White House. More than 1,000 students from across the country signed up to take part in a march.

Armed with slogans “climate justice now”, they carried placards reading “don’t tarnish the earth” with the aim to convince President Obama to reject the pipeline that will have dire consequences for the environment if built.

Students protesting against the proposed Keystone XL pipeline march past the US Chamber f Commerce near the White House in Washington,DC on March 2, 2014

Students protesting against the proposed Keystone XL pipelinerally in Lafayette Park across from the White House in Washington,DC on March 2, 2014.

Along their route, they made a stop outside the residence of US Secretary of State John Kerry to push him to recommend President Obama reject project of a 1,700-mile crude oil pipeline stretching from western Canada to the US Gulf Coast.

Symbolic oil spill outside Sec. Kerry’s residence; protest against Keystone pipeline in DC. pic.twitter.com/tujIrnybHn

— M. Scott Mahaskey (@smahaskey) March 2, 2014

“If the Democratic Party wants to keep our vote, they better make sure President Obama rejects that pipeline,” said Nick Stracco, a 23-year-old student at Tulane University in New Orleans.

Police were waiting for them in front of the White House in their buses and vans. Around 450 people were arrested in this “largest youth act of civil disobedience at the White House in a generation,” according to the environmental organizers 350.org.

Prior to the detentions authorities warned the activists that blocking the sidewalk or strapping themselves to the fence would lead to their arrest.

“Our future is on the line. The climate is on the line,” said 20 year-old Aly Johnson-Kurts, from Smith College in Massachusetts. She said she had decided to get arrested on Sunday. “When do we say we’ve had enough?”

The $7 billion oil pipeline is destined to deliver high-carbon tar sands oil from the Western Canadian Sedimentary Basin in Alberta to a hub in Nebraska, where it would then connect with other existing pipeline networks to deliver 800,000 barrels of crude oil a day to refineries in Texas.

Critics of the project say that, in addition to the carbon-intensive impact that results from the extraction of tar sands that will only worsen the effects of climate change. The opponents also feel that the pipeline will also put communities nearby at risk of oil spills and their subsequent fallout.

Activists are also concerned that oil will go to growing economies overseas that have an increasing demand for more fossil fuels and is unlikely to lower the price of gasoline in the US.

In late January, the US State Department released a report on the project raising few objections to the environmental impact of the pipeline.

Obama blocked Keystone XL approval in January 2012, saying he needed more time for a fair review, pushing the decision to after his re-election campaign. Following the publication of the report Obama is expected to make a definitive decision on approval of Keystone XL in a matter of months.

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