By Chris Fleisher
Lunch crowds in the Hardwood Cafe used to be packed with dozens of workers from the natural gas industry.
A lot of them were regulars. Lately, some familiar faces have disappeared.
“I would say it was right after the holidays that a lot of them were not coming back,” said Justin Trainor, who owns the restaurant in Penn. “The servers would say, ‘Oh, I haven’t seen so and so,’ and (the gas workers) would say, ‘Oh, they didn’t bring them back.’ ”
The falloff in customers has put a dent in Trainor’s business, which has benefited from the gas industry boom in Western Pennsylvania. But low gas prices have forced companies such as Rex Energy and XTO to pull back on new drilling, and the effects are beginning to ripple throughout the region’s economy.
Banks, hotels, restaurants and other businesses that have benefited from the boom times stand to share in the pain from a long-term drop in oil and gas prices.
Natural gas prices fell by a third between October and January, prompting some drillers and related-companies to cut capital budgets and lay off workers. The impact has been barely noticeable in many communities. Loan volumes and hotel bookings have not taken a big hit. But the situation has led to some anxiety about when the effects will be felt.
“It takes a while to trickle through,” said Pat McCune, president and CEO of Carmichaels-based Community Bank. “To date it hasn’t been so bad. But all of us constantly ask ourselves what low prices mean for this area.”
Regulators have taken notice. The Office of the Comptroller of the Currency, which oversees large banks and about 1,400 smaller financial institutions, began reaching out to bank managers in oil- and gas-producing regions last year to evaluate their credit quality and risk from falling prices.Read more