Back when a gallon of gasoline cost $4, Todd Allam logged a busy summer buying and building drilling rigs to scatter across Kansas in 2009.
Oh, this year was supposed to be the big one — with Allam’s Wichita-based company, Val Energy, Inc., boasting eight rigs to tap as much precious crude as the prairie could cough up.
“We just shut down four of those rigs and laid off 51 of our 110 employees,” Allam said. “The first quarter will be an absolute disaster. … We can’t make a go of it on $40-a-barrel oil.”
Just six months ago world crude prices shot past $140 a barrel, and nobody in the Kansas network of mom-and-pop oil producers imagined a collapse this swift.
Many figured that prices could, and probably should, dip. But those who attended the August convention of the Kansas Independent Oil and Gas Association had little reason to dispute the guest speaker from the University of Houston, who assured them that oil wouldn’t fall below $100 a barrel for at least a year, if ever.
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