Newspaper article THE JOURNAL RECORD

Alexander Expects Oil Prices to Fluctuate like Commodities / like Soybeans and Corn

Newspaper article THE JOURNAL RECORD

Alexander Expects Oil Prices to Fluctuate like Commodities / like Soybeans and Corn

Article excerpt

Independent oil producers could be forced to get used to a future where prices fluctuate like traditional commodities such as hog bellies, soybeans or corn, expects Bob G. Alexander, president of Alexander Energy Corp. of Oklahoma City.

Like other independents during this price decline, Alexander Energy is watching its overhead and "high-grading" its drilling prospects - choosing those that will provide the biggest return.

Meanwhile, spot oil prices continued hovering just below $20 a barrel Thursday. The U.S. benchmark crude, West Texas Intermediate, closed at $19.66 a barrel on the New York Mercantile Exchange in contracts for March delivery, unchanged from Wednesday's close, and down from Tuesday's $20.17 close. A barrel is the equivalent of 42 gallons.

Several oil companies, including Amoco Oil Co., Atlantic Richfield Co., and Exxon Corp., announced that they would pay between $1.50 to $2 less for various grades of domestic petroleum.

All three said they would pay $25 a barrel for West Texas Intermediate.

Alexander expects price levels around $20 a barrel to cut drilling expenditures in Oklahoma simply because only shallower wells - say around 5,000 feet - will prove economical.

But Alexander, a veteran of the oilpatch since the 1950s, doesn't agree with recent predictions by "experts" that prices are going to stay depressed into the 1990s. He noticed a pattern emerge in 1985 he expects may be repeated in coming years - high oil prices in the fall and winter then weak prices in the spring and summer.

"The experts have not been right yet," he said.

The price stability most long-time oilpatch veterans have known may never be seen again now that oil futures are traded like any other commodity, said Alexander.

That could permanently change the economics of independent producers, he said.

"We are in a situation where we may never again see prices stable as the people who have worked in this business for many years have seen," he said. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.