New edition of the Boerne Business Monthly and a monthly column titled: "Mooney Makes Sense"
In this edition, I address the oil and gas prices and its affect on the art market.
BBM can be read online at:http://issuu.com/boernemag/docs/february_2015_bbmonline
-Good prices for consumers,
but bad news for oil field workers and the arts.
As of January 20, 2015, Baker Hughes has announced the lay-offs of about 7,000 employees, falling in line with Schlumberger who is cutting 9,000 jobs, and Apache who has already cut hundreds of employees. Energy giant, Halliburton has commented, “…we will make adjustments to the cost of structure of our business as needed.” All casualties of the continued fall of oil prices The fact is the price of oil has dropped more than 50% in a year and this has not only affected the workers in the oil field but the trickle down economy; leisure spending included, and specifically the South Texas Art market.
The continued decline in oil barrel prices over the last six months has produced a shift of spending habits in the regional art market. Many of the top art collector, aficionados and purchasers who are heavily vested in the oil and gas industry have cut back on spending, meaning fewer sales in the galleries and art studios. The January 2015 Kiwanis Western Art and Heritage Exhibition’s attendance and sales can be attributed to this factor, among others. We look to the March madness of the Briscoe Western Art Museum’s “Night of the Artist” exhibition to see if the trend continues. With multi-million dollars in sales anticipated for the signature one night event, only time will tell how well our regional economic health will deter financial outcomes for this museum.
However, locally there are several complex financial factors mixing the muddy waters. On the gallery level many pendulums are swinging in full force. With anticipation of needing cash or assets to offset the decrease in royalties and direct income, some collectors are looking to sell or consign choice items from their collections, giving in to cash and looking to wait out the oil price fluctuations. This in turn releases unique art troves into the aftermarket that would not ordinarily be available, allowing others to possibly own an investment item. These sellers anticipate they will need the money, so by liquidating some lower to mid-level art pieces, they can cash in on the stable art market and be more confident with their financial security.
On the other hand, those who want to diversify their portfolios are collecting their money out of the banks, out of the stock market and other volatile investments and capitalizing on the affordability of physical assets. The art market is perfect for this. The purchaser can see the stability in the art market as a positive. The resale market is alive and well, giving credit to a sound financial investment.
The forecasts for the oil industry range from the doomsday sayers to the optimistic purists. We see estimates for the next six months to the next six years. Nothing is set in stone and the foreign oil markets will continue impact the global drive supply and demand.
My advice, do not let this hamper your art experience. Purchase what you like, what you love and be comfortable in those acquisitions. In6 to 12 months, we will be writing a new national financial story, but the art value will still be there; whether it is metaphysically imposed by the purchaser or dictated by current art market appreciations.
Don’t be scared, enjoy the art around you, support your local artists, your local galleries and become patrons of the museums, cultural centers, and institutions. As for Oil prices, …”This too shall pass.”
© Gabriel Diego Delgado
Gallery Director, J.R. Mooney Galleries – Boerne.