Low crude oil prices not the long-term story or trend

The drastic drop in crude oil prices in 2015 and 2016 have had a significant impact on the small businesses that make up the Kansas oil and natural gas industry.

But low crude oil prices are not the long-term story or trend.

Many oil and gas companies in Kansas and elsewhere cut capital expenditures by 75 to 80 percent in 2015.

Some oil and gas service companies have laid off as much as 50 percent or more of their workforce, and some producers have laid off as much as 20 to 25 percent of their workforce.

The oil and gas industry makes significant investments in developing human resources and agonizes over workforce losses.

Oil production in Kansas fell by 5.5 percent in 2015, but a much larger decline can be expected in 2016 if oil prices stay low. Oil production decline generally lags oil price collapse as producers work to maintain production and improve operating efficiencies.

As a result of low oil prices, the industry experienced a 70 percent drop in drilling rig count and a 68 percent drop in drilling permits issued in 2015. In addition, oil and gas severance tax collections by the state of Kansas and property tax collections by counties dropped dramatically.

The economic effects are everywhere. Oil and natural gas play an integral role in nearly every aspect of our lives.

Nearly every person uses some product from petroleum in their daily lives. If you think about all the associated service and supply companies that support the oil and gas industry combined with the consumer spending impact of oil and gas industry payrolls, you begin to get a picture of the enormous impact of the oil and gas industry.

The longer oil prices remain low, the more the oil and gas industry will continue to constrict. In turn, considering the economic impact of the oil and gas industry, that would be detrimental for the economy as a whole.

The price of crude oil will recover in the future, and the oil-producing characteristics of Kansas uniquely positions the state for a bright energy future.

Over the past decade, market forces have spurred massive amounts of new oil and natural gas production. Oil and natural gas supply 63 percent of U.S. energy consumption today.

President Obama’s Energy Information Administration estimates that 25 years from now, fossil fuels will account for nearly 80 percent of our country’s energy consumption.

The men and women of the oil and natural gas industry reject the stale mindset of last century’s thinking peddled by some that oil and natural gas production and environmental stewardship are not compatible. From 2000 to 2012, the oil and natural gas industry spent more on low- and zero-carbon technologies than the federal government and nearly as much as all other industries combined.

Affordable, reliable energy is essential to our economy because energy powers everything that makes modern life possible. We need smart energy policies that promote our nation’s energy position as a leader in energy production.

We need tax reform solutions that don’t compromise our ability to grow the economy. We need a regulatory approach that invites input from industry and bases rulemaking on sound science, legitimate cost/benefit analyses and economic impact.

We must abandon policies that say we must have less oil and natural gas so that we can have more of something else. The American public and future generations deserve better.

This story was originally published April 21, 2016 at 7:56 AM with the headline "Low crude oil prices not the long-term story or trend."