Over 80 oil and gas companies have declared bankruptcy since the start of 2015, equating to roughly $54 billion dollars in debt. A recent report indicates that another 175 companies could be at high risk of going bankrupt as well. Oil companies and other large corporations commonly file a chapter 11 bankruptcy that allows them to restructure their business debts while remaining in business. So why is this wave of bankruptcies so endemic and what are the implications to the average driver?
Why Are So Many Oil Companies Declaring Bankruptcy?
With the monumental drop in the price per barrel for crude oil in recent years, it shouldn’t be hard to imagine that many companies are struggling to stay in business. Crude oil prices dropped from well about $100 at the start of 2014 to under $40 a barrel at the start 2016. Many individuals not intimately familiar with the oil industry may not know that most oil wells are profitable until $50 per barrel, while there has been a recent rise to this level in recent weeks, there’s typically a 3-5 month period of time that the oil producers need to “catch up”. In essence, while there has been a rebound in oil prices, for many production companies, the recovery may be too late.
What Does It Mean for Me?
Oil prices have been rising on the back of a weaker dollar. This means that unfortunately, normal commuters won’t see a big change in gas prices outside the normal fluctuations. Hopefully not all the 175 companies that are in danger will go out of business, and those who work in the industry have also seen the worst of recent job cuts. If you are an investor or work in the oil and gas industry, and have recently been burned by debt, call your local Texas bankruptcy attorney to discuss your situation and find out what your options for debt relief are.