To just survive the modern oil bust, companies have slashed $180 billion dollars in spending and erased over 176,000 jobs worldwide. The stats are staggering, and some oil firms believe that the crisis will have just as strong or more of an impact than the oil crash of the 1980s.
While the dust still thickens in the economic airspace, Bloomberg data has revealed that energy companies have lost $1.3 trillion in value since last summer’s peak in oil at $107 per barrel.
To put that overwhelming number in context, in a little more than a year, 157 energy businesses have lost the combined market capitalization of Mexico’s annual GDP. You literally could buy countries with the amount of energy industry economic value that’s been obliterated. If you were to count back in time 1 trillion seconds, you’d end up around 30,000 B.C.
“The hit has been huge,” said chief investment officer for Delaware Investments Chris Beck in a recent Bloomberg report. “Everybody was thinking that oil would stay in the $90 to $100 a barrel range.”
The hit is far reaching beyond the pockets of energy CEOs. According to Bloomberg, the California Public Employees Retirement System, a $303 billion fund that provides benefits to 1.72 million people, owned a $91.8 million slice of Pioneer Natural Resources Co. in June 2014, Pioneer was a $33 billion company and one of the biggest shale producers in Texas. Today, Pioneer is worth $19 billion, and Calpers’ stake has lost about $40 million in market value.
Investors could make their money back with a strong crude rebound. However, as 2015 has shown already, numerous domestic and geo-political variables are constantly fighting against an oil price increase. Not to mention, we still have a worldwide oil glut issue to deal with. Bloomberg noted that after the tech bubble burst in 2000, erasing $7 trillion from the Nasdaq Composite Index, it took almost 15 years for the market to return to its pre-crash level.