RandomHero

Is that a driveway, wide sidewalk with trees and a plaza with seating between the building and Richmond? I would be somewhat surprised if the setback from Richmond ended up being that wide. This lot is not particularly deep. Hope they prove me wrong. 

http://www.bizjournals.com/houston/blog/breaking-ground/2015/04/energy-corridor-office-space-doing-better-than.html

What's this? The sky isn't falling? The tone of the article suggests that HBJ can hardly comprehend that end of days hasn't arrived yet as they have been predicting for months. 

Awesome. This looks like a great project and it will look great at this location. Love the density of greenway plaza. 

I don't work in the oil industry but I'm interested in the dynamics nonetheless. Here's my question: how can we have a boom when the price is high and not have a bust when the price is low, as some of these articles are suggesting?

No one has answered my question.

Imagine that you are Exxon, Conoco, Chevron or one of the other major Exploration & Production Oil companies. Right now you are being hurt because the profit margin for every well you are pumping oil from is decreasing with the price of oil. These "upstream" operations become less profitable with lower oil prices. This is especially true of wells in "unconventional" plays (shale, oil sands etc.). However remember that all of these large companies also have "downstream" operations like transport, refining and selling retail gasoline and other petrochemicals. Transporting oil costs the same no matter what the price of oil is so there is no real impact to companies who are primarily engaged in transport via pipeline and rail. For a refinery a barrel of oil is actually a cost to them so the lower price is actually a benefit for refining operations. Also, the lower cost of gasoline means people are going to drive more and visit the gas station more often. They will have extra money in their pocket from cheap gas to go in the gas station and spend on soda's and food. This helps offset some of the upstream losses if they company has a lot of retail (i.e gas stations) exposure. Also keep in mind that these huge multinational producers are well diversified up and down stream as well as across multiple energy sectors (nat gas, renewable etc.). They own billions of dollars worth of physical assets (real estate, heavy equipment etc.) that they can consolidate and leverage to weather this storm.

The companies that are really getting crushed are small cap oil producers. These are the companies that came onto the scene when oil prices were high and borrowed a ton of money for drilling equipment and land using the future profits as collateral for these loans. If the price of oil stays at current levels or goes lower these small companies will not be able to repay their creditors. This is actually of some concern because this could affect the financial credit markets beyond just the energy sector. Some are drawing comparisons to the subprime crisis and resulting financial meltown of 2007. The difference between energy companies defaulting now and banks defaulting then was that in 2007 there were no well capitalized entities to swoop in and buy up the cheap assets. In this current energy crash, large companies like Exxon and Conoco will be able to swoop in and buy the assets of these small over-leveraged drilling companies at bargain prices as they go belly up. In the long term this will strengthen the big producers despite the short term pains. 

Finally you may be asking why the stock prices of the best oil companies like Exxon, Kinder Morgan, Haliburton etc. are getting crushed along with the smaller and riskier companies. Without getting into a discussion about finance with the rise of ETF's most investors trade energy as a whole sector by buying an energy ETF as opposed to doing the research and buying individual stocks. Therefore when oil crashes people panic and sell the entire sector out of fear and all the stocks get hammered. In the coming months there will be some great buying opportunities in the stock market for the best run oil companies once oil finds a floor and some stability returns to the market. 

Looking at the google street view those Oaks are beautiful but the "townhomes" on that street are pretty dumpy. If they house low income folks who can't afford the high rates in that area then I do have sympathy. Ironic though that the woman mentioned in the article works at a Whole Foods that is supported by the yuppies she is demonizing.