HOUSTON - Swift and ferocious - the one-two punch of Coronavirus and a global petroleum price war has knocked the Texas oil and gas industry to its knees.
Paul Byington, President of Axis Pipeline Construction, has survived multiple downturns over his four-plus decades in the oil patch.
He says for many fellow operators, job shedding is already underway and will likely continue unabated.
"We are already seeing it. I talked to a senior manager this morning from another company and they are already having some layoffs as a direct result of what's going on in the market today," said Byington. "It's not just one variable, but all things together. Companies are already starting to tighten up and reduce some of their operations."
For a Lone Star State accustomed to drawing billions in annual energy revenue, the market turn is a recipe for recession.
"There should be layoffs in the (oilfield) service side pretty quickly, that's just going to be bad," said Ed Hirs, energy economist at the University of Houston.
Hirs says with COVID-19 suppressing global demand and the Saudis flooding the market with oil produced for as little as 5 dollars a barrel, production in Texas and much of the U.S. will come to a screeching halt.
"This is going to really hurt the state. $120 million dollars a day, just over six months, now you are talking about $25 billion in lost GDP, just for our state," said Hirs.
As a result of the oil glut, the Energy Information Administration is forecasting that consumers can expect to pay less than two dollars per gallon for gasoline well into the spring.
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