The good and bad news about falling fuel prices in Texas

CONNIE SWINNEY • PICAYUNE STAFF

MARBLE FALLS — Plummeting fuel prices have consumers cheering for unleaded gasoline at less than $2 per gallon while oil and gas producers begin to cut staff, scrap new projects and slash expenses to stay afloat, officials say.

“Since right around Christmas, it’s been coming down almost daily. It was well over $3, and now it’s sitting at $1.79,” said David Vanscoy, acting manager of the Kwik Chek Exxon station, 1003 RR 1431. “Customers are not hesitant to fill up, where before, they would be. It’s having money left at the end of the pay period is what people like about it.”

Vanscoy said the fuel price plunge has yet to affect retail sales.

“I’m seeing an uptick in the amount of fuel I sell. That’s good because it’s based on market sources,”  he said. “If the availability is there, then we still maintain our margin.”

On the other hand, the drop in prices has caused a strain on those in the business of producing and supplying oil and gas.

Mike Porter, owner-operater of James W. Porter Special Oil Producers, headquartered in Blanco County, oversees an oil-production site in the Beaumont area.

“There have been layoffs,” he said of the industry overall. “There have been drilling programs that have been curtailed. In the land management industry — the people who go out and do the leasing, property and title searches — there have been quite a few layoffs. All the service companies have cut back, and employees working on rigs have been laid off.”

He said industry officials blame an oversupply of the product and tenuous politics worldwide for the decreasing price per barrel.

“In the last four or five months, it’s been a radical drop. You go from  $100 (per barrel) down to $47 for West Texas intermediate,” he said. “A lot of the people who have big bucks borrowed, they’re in an awkward situation now.”

The size and scope of the Blanco-based business has allowed the company to sidestep much of the fallout, so far.

“We’re just a real small company. We don’t operate on debts like so many people do. It’s a family business, so we have an advantage there,” he said. “The way it has affected us is that we’re just trying to cut back on expenses at this point.”

Communities can expect to brace for a negative ripple effect tied to the price dive.

“I’ve seen this many times over the last 30 years. I’m in the construction business, and it will start to have a negative effect,” said Mike Pilley of Mike Pilley Enterprises in Marble Falls. “People will have less money and won’t buy those second homes. Construction will slow down.”

The fallout is also expected to creep into the public sector as well as private industry.

“A lot of small school districts in oil-producing areas, school districts like where we produce, there really isn’t any industry there, so the school districts are funded mostly by oil and gas taxes,” Porter said. “When the oil prices drop, so do tax evaluations.”

Industry officials say programs such as the Texas School Fund for higher education, markets responsible for transporting oil and gas and retail gasoline suppliers eventually will experience dwindling revenues, which could result in lost jobs.

“The economy in Texas, oil and gas is one of the main driving forces. When the industry slows down, it affects everybody,” Porter said. “For the consumer, when it comes to gasoline and propane, the prices should continue to come down, but it’s a double-edged sword.”

He believes no one can predict when fuel prices will hit bottom.

“It’s just the oil traders trying predict what’s going to happen in the world,” Porter said. “If anybody tells you they know where the price of oil is going, it’s pure speculation.”

connie@thepicayune.com