Crash of ‘86 Left Permanent Scars

By DAVID BROWN
EXPLORER Correspondent

You could almost hear the pain.

"It hurt like hell."

Everything people in the industry knew about oil pricing turned out to be wrong.

This year the petroleum industry observes the 20th anniversary of the Oil Price Collapse of 1986.

No one in the industry who went through that time will, or can, forget it.

In less than 12 months, world crude oil prices fell by more than 60 percent.

The global oil and gas business collapsed like air screaming through the neck of an over-inflated balloon.

Hundreds of thousands of oil workers were laid off.

Texas reported 366,200 jobs related to oil and gas extraction and oilfield equipment in the early 1980s, according to the Federal Reserve Bank of Dallas.

By 1987, only a year after the price collapse, 175,000 of those jobs had vanished.

Company divisions evaporated.

"There were guys with doctorates flipping burgers," is a comment you'll still hear in Houston oil firm offices.

The biggest employer of petroleum engineers after 1986 was said to be Safeway grocery stores.

Texas alone -- just Texas -- lost more than $1 billion in oil and gas severance taxes.

Australia's oil industry spent $740.4 million on petroleum exploration in 1984, according to the Australian Bureau of Statistics.

In 1987, it spent $346.4 million.

The Oil Price Collapse of 1986, coming so quickly and cutting so deeply, created a mindset in the global oil industry that persists to today.

http://www.aapg.org/explorer/2006/01jan/crash.cfm

‘Hurt Like Hell' Everything people in the industry knew about oil pricing turned out to be wrong. In August 1986 , the world oil price dropped below $9 a barrel. "The actual low point in Oklahoma was $8.25 in 1986 , for good-quality sweet crude," Swearingen said. Some shipments of crude changed hands at less than $7 a barrel. The upstream sector of the industry went into a tailspin. "Nationwide, marginal wells were being plugged one every 30 minutes. In Oklahoma, it was about eight per day," Swearingen recalled.

Truly Nigerians are blind, this OBJ/GEJ and cohorts have this to answer, They enjoyed not only oil boom but proceeds from gas remain unaccounted for.