It’s seems the US economy is slowly but surely fading away. And no signs are better indicators for the catastrophe that’s about to come than the current situation of oil and gas throughout the whole country. What once was the US’ strongest asset is in a constant and apparently irrecoverable state of being. Almost a third of the US gas and oil companies are on the verge of disappearing by the end of the year; if this happens, things will get from bad to worst in record time. There was a report published back in February 2016 by Deloitte (a prestigious consulting and business company) which took a serious look at the local gas and oil market. The study was originally focused on 500 companies that deal with oil and natural gas exploration and production; the result showed that about 175 of the companies involved in the study are on the verge on filing for bankruptcy, as they total about $150 billion in debt.

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The struggle of the industrial giants

John England, the US oil and gas sector leader and vice chairman of Deloitte thinks that 2016 will be “the year of hard decisions”, as he put it. In his view, many of these companies will not escape the “hangman’s noose” and when this happens, the economic instability that will follow will hit the population harder than any economic recession ever has. He also stated that these companies no longer have the economic support and safety net that they used to have from banks or governmental bailouts; there’s almost no help left for industrial giants that can’t make ends meet on their own. Oil prices are fluctuating like crazy, and it’s this erratic drop and growth which destabilizes the oil and gas companies. In early February, there was an almost record low of $29 per barrel of crude oil. The drops in oil prices cause real problems in the oil producing states like North Dakota, where oil production has been almost perfect in the past decade. What once was an oil oasis is now turning into a no-man’s-land, as fewer and fewer drilling projects occur and fewer and fewer people are involved. Nancy Hodur, research assistant professor at North Dakota State University had this to say in a New York Times interview: “Those communities out there were drinking out of a fire hose. A lot of those communities would come right out and say that pace of growth isn’t good, isn’t sustainable. They’re still playing catch-up.”

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A dangerous precedent has already occurred

It was the New York Times that has published an article about three months ago that gave clear insight of the current status of things; according to the investigation, about 60 oil and gas companies have filed for bankruptcy in the last year and a half. And as long as prices stay down, the number could multiply several times by the end of the year. The report released by Deloitte speaks about the struggle that these companies are facing and also about the safety precautions involved. The companies that find themselves with one foot in the grave are the ones that have substantial debt that they can’t seem to handle anytime soon. But just because some seem to be in less trouble than others, doesn’t mean they’re completely out of harm’s way. “There is no silver bullet solution that applies to the whole industry; in fact, the landscape has never been more complicated. Each company has its own set of unique factors to consider – from issues specific to each producing region and asset, to various states of financial circumstances. Staying solvent will require the same level of perseverance, innovative thinking and creativity as the technology breakthroughs that led to the boom in supply we have seen over recent years”, said Andrew Slaughter, the executive director of Deloitte Centre for Energy Solutions.

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The situation is critical and the outcome will be devastating if things keep going down this path. If the energy industry destabilizes beyond repair, it will send out a devastating shockwave throughout the whole sector, which will hit everything in its path. Once the oil and gas sector is wiped out, the fuel industry will have no chance of recovering, considering that the coal sector isn’t doing great either and could be next on the list. It’s hard to say what tomorrow will bring, but it can’t be anything good according to the numbers; and numbers don’t lie. Hope for the best, but prepare yourselves for the worst.

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