Oil Industry, West Texas Intermediate, the US benchmark grade of US crude oil, did not simply plunge to its lowest price in history today. It dropped more than 300 % and even went into negative territory.
Traders concerned about plunging demand for gasoline, as millions of Americans wait out the covid19 pandemic at home, saw WTI near-term futures tank from about 18 dollars a barrel to literally nothing.
That plunge, of course, could have dire consequences for the kern county economy, with thousands of people employed by the industry that pays hundreds of millions of dollars in property taxes to the county each year. Those tax dollars pay for a substantial portion of county services, including law enforcement, roads, and parks.
With demand for oil at historic lows and supplies way up US storage tanks are near their limit and refineries are not asking for more crude. The good news is that the county doesn’t establish oil property tax values, until January 1st, so the price still has plenty of time to come up again.
And kern county bases property tax values on Brent crude, rather than the more volatile West Texas intermediate but Brent prices were down as well today, to 26 dollars a barrel a 6 % decline. Also on the horizon is OPEC (Organization of the Petroleum Exporting Countries) agreement with its oil-producing allies to cut production by 9.7 million barrels a day starting May 1st.