Oil prices are now below $50 a barrel and wrecking havoc across the oil-producing states as rig counts are coming down. According to Baker Hughes, a service company that tracks oil rig counts, oil rigs in the United States dropped by 61 in the week that ended on January 9, and fell by 26 the prior week. The current rig count is at 1750, down by 146, about 8 percent, from its 2014 peak.[1] Helmerich & Payne, a large contract rig company, has mothballed 11 rigs and it announced last week that it plans to idle up to 50 rigs over the month. So, in just a few weeks, the company’s shale drilling activity will be reduced by about 20 percent. Oil prices are now low enough that many oil companies expect drilling costs to be higher than the market price, leading to lower production and eventually higher prices. Experts believe that this low oil price environment, however, will last at least six months.[ii]
