Perhaps not so much. These days, Texans are getting worried about what the plunge in oil prices in the past six months will mean for the economy. We’ve seen this before, of course, in the 1980s. In the latest issue of Texas Monthly, I compare then and now:
Late last June, the price of a barrel of oil, which stood at $108, began to slide. By July 14 it had dropped to $102. By August 19 it had reached $94. But it wasn’t until autumn, when West Texas Intermediate crude—the benchmark for U.S. oil prices—slid below $90, that producers and investors began to worry. The price kept slipping. On November 26, it stood at a measly $74. Then, a day later, on Thanksgiving, OPEC announced that, contrary to the hopes of many, it would do nothing to cut production. Oil went into a tailspin. By early January, the price of a barrel had sunk to $48, less than half of what it sold for just six months earlier.
That’s the sort of precipitous decline that changes everything—hiring practices, driving habits, consumer purchasing decisions. As if on cue, oil companies slashed jobs and drilling budgets. Permits for new wells fell 50 percent in November from the previous month. Bloomberg News wrote of a coming oil “storm.” But in Texas, people were thinking of another word that still sends chills down spines from Kilgore to the Permian Basin: bust.
It’s been almost thirty years since Texas has experienced a boom-bust cycle as extreme as this one. Sure, in the late nineties oil dropped below $11 a barrel, touching off a string of mega-mergers that brought us the likes of ExxonMobil and ConocoPhillips. And in 2008 the global recession caused oil to plunge from $145 a barrel to less than $40 in six months. But those busts weren’t preceded by frenetic, dancing-in-the-gusher booms.
The best parallel to what’s happening now is the boom and bust of the eighties. At the beginning of the decade, Texas loomed large in America’s response to the OPEC oil embargoes that had panicked the country during the seventies. Never again, we vowed, would people line up at gas stations in the wee hours hoping to get a tankful before the stuff ran out.