Cheap Gas Taking Toll on Local Oil Companies

Gas prices on the Central Coast are falling toward two dollars a gallon for regular unleaded or even lower, prices not seen in years.

Its proving to be an economic stimulus for local consumers who are finding more money in their pockets.

“Instead of spending 75 dollars I’m going to spend 40”, says Santa Maria resident Karli as she fills up at the Arco Station on Blosser Road where its less that $2.40 a gallon for regular unleaded.

“This guy right here during the high prices was about 80 dollars to fill this thing up back in the day of high prices”, adds Santa Maria resident Rick as he fills up his truck at the same Arco Station.

Falling oil prices which is behind the plunge in gas prices at the pump is not good for the local oil and gas industry.

The plunge in oil prices amid what many believe is an energy production boom on the Central Coast could end up costing good paying jobs and local tax revenue that has helped fuel the local economic recovery.

“Yes, I have thought about it”, adds Santa Maria resident Susanna filling up at the Arco Station, “everybody wants to save money so you think about your family and you think about yourself first, I think.”

A spokesperson for local oil firm Santa Maria Energy says its prepared to deal with the cyclical nature of oil prices which is good and bad for business.

The spokesperson acknowledges the plunge in oil prices, from $90 a barrel to $45 in the past few months, will result in scaled back producution and new development until prices stabilize.”

Here is the full statement from Santa Maria Energy (SME) to Central Coast News.

“As is typical for these cycles, the costs of goods and services required to install new equipment as well as produce the oil adjusts with the price of oil (e.g. costs lower when oil prices fall and costs rise as oil prices increase). Accordingly, this will allow local companies (such as SME) to ride out the cycle as prices continue to adjust. That being said, we are likely to see some contraction of development plans until prices stabilize.

The statement is echoed by another large, local energy firm, ERG, which says its halting new production development projects that will hurt local contractors who employ dozens of people.

So far ERG says it has not had to layoff any of its staff employees.

So, how long will the cheap gas prices last?

“I don’t expect them to, they never do”, Rick says as he tops off his tank.

“No, oil companies, come Spring time when they change their blend then they will jack it up”, adds Santa Maria resident David with a laugh, “we already know that.”