The current retail price for gas implies oil trading in the $15-$20 range.
At the Christmas Eve party I attended last night there were a lot of oil and gas people. This was a big topic of conversation: How will this bust differ from the 1980s? One big difference this time is the majors did not go on a wild drunken hiring binge. Even with the collapse in prices there is a desperate shortage of talent because so many of the engineers and geologists are in their 50s and 60s. There are few young people in this field. (Hint hint for you college freshmen who are wondering what you should major in.) Hiring has been slow and steady for the past decade, and it seems that none of the majors priced their operational costs on $100 oil or even $50 oil.
So that's the buzz at at least one party. Is it true? I dunno.
One thing everyone agreed upon is the small players and wildcatters drilling out there in remote areas of Texas and Oklahoma are gonna get hammered. Plenty of small town roughnecks will be unemployed very soon. Big layoffs for oilfield service workers lie ahead. You good folks in Midland-Odessa? Brace yourselves. You folks up in Parachute, CO and in northern Alberta working the oil sands? Sorry, the good times are over. Oil trading at $20 means your operations will be shut down.
Gas was .99/gallon in 1999. Oil was trading under $10. Houston still did OK then. This time? Who knows. Petrothugs like Melonhead will quickly come to the realization that extracting oil is an increasingly complex business, one that is not efficient when it is turned over to untrained, uneducated petty hand-picked bureaucrats. It requires highly-trained engineers and scientists. Most of whom just so happen to live here. One thing is certain: Citizens of Iran, Venezuela and Russia will be very, very restive in 2009.
All of you people touting "peak oil" nonsense who failed to recognize the oil and gas bubble for what it is: Don't you study history?