Texas slides into crisis due to coronavirus
Texas slides into crisis due to coronavirus

The economies of Russia and Texas have very much in common. To start with, their GDP volumes are almost equal, but Texas’ GDP is slightly higher than the one of Russia’s. Besides, both economies are very dependent on the oil market. This is why Russia and Texas are currently experiencing similar problems. Even before the pandemic outbreak,  a lot of Texas shale companies ceased to exist due to the jitters in Russia’s commodity market. Other companies were forced to put on hold the operation of some oil rigs and reduce investment.  “While US oil production growth was already on the verge of leveling off due in part to the steep output-decline rate of existing wells, the drilling slowdown makes it likely that US output will struggle to reach its previous highs in coming years,” the Dallas Fed said. Even if the situation on the global oil market stabilizes, oil prices will not be high enough for most shale companies to stay afloat. What is more, demand for oil did not spike up after the lifting of the quarantine restrictions. People are still staying at home in order to minimize the risk of catching the virus.  “We probably have to let go of energy as being the No. 1 industry in the long run,” Peter Rodriguez, dean of the Jesse H. Jones Graduate School of Business at Rice University, said. “That primacy is no longer in the cards for Texas,” he pinpointed.

Published: 2020-05-27 09:42:56 UTC
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