I am sure that all of us have been pleasantly surprised and relieved by the substantial decrease in gasoline prices over the past year. As a bankruptcy attorney, I am glad cheaper gas has allowed my clients who are struggling with debt to have a few extra dollars each month to meet their needs. But this good fortune will come with a price, i.e. the drastic economic impact that has already begun affecting our oil and gas industry in this country. The Wall Street Journal reports that 2017 will see an increased wave of bankruptcy filings in the energy sector due to the game of chicken that is playing out between Mideast oil countries and the United States. As the shale oil and gas boom in America began growing legs over the last few years, it appears the Mideast oil countries response has been to double down on oil and gas production resulting in a glut in the global oil and gas supply. This oversupply has driven down prices to a record $30 dollar barrel of oil. While that is good for the consumer, it is already causing the oil and gas industry in our country to begin downsizing with the layoff of workers and the filing for Chapter 11 bankruptcy relief.
The coal industry in Alabama has already been hit hard by bankruptcy filings. Walter Energy and Birmingham Coal & Coke both sought bankruptcy protection in 2015. According to the Wall Street Journal, oil and gas producers are losing approximately $2 billion dollars weekly at the current barrel prices. Despite this massive loss, there is no sign the industry plans to scale back on production. It also appears it is unlikely any white knights will appear to lend a hand to the industry. Instead, analysts predict the private equity firms will wait in the wings to scoop up records deals for oil and gas assets coming out of Chapter 11 restructuring.
While this blog has addressed the effect on the oil and gas industry as a whole, there is no question that ultimately this will affect the men and women who go to work daily in this industry. Layoffs will be inevitable which will make it hard for working families to meet their monthly obligations. If you have been affected by the downturn in the oil and gas industry and are struggling to make ends meet, a bankruptcy filing now rather than later may provide needed relief. Please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation with one of our experienced, licensed attorneys.