WICHITA, Kan. (KSNW) – With oil prices falling to a record low this week, some local oil and gas companies are worried about the future of their business.
What you’re paying at the pump might be good for your bank account, but Kansas companies are now facing the harsh effects of the historically low prices.
“I’ve been in business for 40 years, and I’ve never seen prices like that,” said Alan Banta, president of Trans Pacific Oil Corporation.
The price of one barrel of oil has fallen into the negatives, forcing some companies to decide what’s next.
Some Kansas companies halted business weeks ago, while other are continuing to work.
“You might as well just give it away,” said Ron Gulick, owner of Gulick Drilling, Inc. “They’re just waiting it out to see what happens. It’ll probably put a lot of people out of business.”
With thousands of oil and gas companies in the state, Banta said there will be some smaller businesses that aren’t able to withstand the price drop.
“This is our livelihood and our families depend on us to provide that livelihood,” said Banta.
With not many people traveling due to the stay at home order, the demand for oil is decreasing while the supply keeps going up.
“It’s a big part of the economy of our state,” said Banta. “It pays a lot of our taxes and that’s all going to be compromised. It’s ugly.”
It’s not just these companies that will feel the effects, though. Rural Kansans who rely on the revenue from oil and gas could be hit hard, too.
“It depresses the grain prices that make those fuels,” said John Jenkinson, KSN agricultural analyst. “In turn, leaves lower income at the farm game.”
Experts said the only relief could be the economy opening back up after the pandemic. Some said that’s when they expect the prices to even back out, but there is no timetable for when that will actually happen.
“The vast majority of the companies in Kansas are mom and pops,” said Banta. “They depend on those wells and the profit from those wells totally for their livelihood.”
Some experts predict the prices to drop even lower, forcing some companies who have already closed shop to remain closed until prices even out.