How Do Oil Prices Affect Texas Ranchers?
There’s an old rancher’s saying that the cattle always look good around an oil well. It means if the ranch is making money leasing to oil companies, the ranch's finances are probably in pretty good shape. So, is the decline in oil hurting Texas ranchers? That’s something state lawmakers are trying to figure out.
That’s one of the interim charges for the House Committee on Agriculture & Livestock – basically, homework for the committee to study before the next legislative session. South Texas rancher Leslie Kinsel says they’ll likely learn the relationship between oil and ranching is complicated, to say the least.
“There’ve been huge pluses to farms and ranches, and huge negatives,” she says. “And you just deal with it.”
She also leases her land to oil companies. She says when the oilfield’s booming, those royalty checks can help ranchers invest in their business and see them through some tough times.
“[In] the Eagleford Shale, the height of the development came during the worst drought we ever had,” she says.
But, those checks can only come if ranchers own the mineral rights to their land. And a lot of oil activity also means damage to roads, fights with pipeline companies over land use or even trucks running over your livestock.
“So if you get too much development on a ranch, then it's lost its value to a cattle producer,” Kinsel says.
But, with oil prices remaining low, a lot of that development has dropped off.