KGOU

A Look At What To Expect In Business News In 2018

Jan 3, 2018

As we start a new year, Journal Record editor Ted Streuli and KGOU’s Jacob McCleland highlight what could be some of the biggest themes in business news in 2018.

Oil and gas technology

Oklahoma’s oil and gas industry could be in for a good year. State lawmakers passed legislation last year that give producers the ability to drill long lateral wells, and new technology is bringing down the industry’s break-even point.

Streuli told KGOU that technology in the oil patch grew significantly in 2017, and the new tech will help drillers’ bottom lines.

“Even if prices stay the same, at around $50 a barrel, it dramatically lowers their break-even point, which used to be about $60 a barrel. And it can be down now as low as $25 or $30. So that leads to very high expectations from the STACK and SCOOP plays this year,” Streuli said.

Streuli also expects the lifting on the ban on oil exports to come into play this year.

New liquor laws

Voters approved sweeping changes to Oklahoma’s liquor laws in 2016, and the law will go into effect this year. Among the changes, convenience and grocery stores will be able to sell cold, full-strength beer and wine. Liquor stores will also be able to refrigerate beer and wine, and can sell some non-alcoholic products.

Behind the scenes, there have already been some changes in distribution. Journal Record reporter Molly Fleming wrote Oklahoma City-based Central Liquor and Republic National from Louisiana are partnering to create a new distributorship. She also wrote another longtime Oklahoma distributor, Jarboe Sales, has partnered with Florida-based Southern Glazer's Wine & Spirits.

These types of partnerships are new because State Questions 792 completely changed how alcohol gets to the public. Streuli says the new law gets rid of a requirement that a broker be involved between the producer and distributors.

“The broker system is no longer needed because the new laws allow alcohol manufacturers to sell directly to the distributors. So that completely changes the game on the back end,” Streuli said.

Downtown Oklahoma City development

Oklahoma City’s new downtown streetcars will begin running this year. Streuli says the streetcars will be open for public use toward the end of the year, but the city will be running tests on them earlier. In the spring, the new Will Roger Trail will connect the downtown river to Lake Hefner. The 70-acre downtown park will continue to be under construction, and won’t be open until 2020. Bank of Oklahoma, or BOK, is moving into a new tower this month.

“The other big thing we're going to see is that they're going to break ground on the new convention center in May or June, so more downtown construction. That's a little behind schedule but it's going to get going in the middle of this year,” Streuli said.

FULL TRANSCRIPT

Jacob McCleland: It's the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Jacob McCleland and I'm joined today by Ted Streuli. He's the editor of The Journal Record newspaper. Ted, thank you for talking with us.

Ted Streuli: Glad to be here Jacob.

McCleland: So Ted, it's the first week of the new year and we had a lot to talk about last week when we were looking back at 2017. And today I of want to consider what's on the horizon for 2018. As you mentioned last week there was a bit of a rebound in the oil and gas industry last year. What are some of the energy sector stories that you'll be looking at in 2018?

Streuli: Well I think the very first one is going to be the effect of last year's legislation on their ability to draw to drill long lateral wells. That's going to have a big impact. The other thing that's really huge this year is the efficiency in technology. Technology in the oil patch grew by leaps and bounds in 2017 and this year it's really going to come into play. They're going to be able to get more oil out of each well at much lower cost. So even if prices stay the same, at around $50 a barrel, it dramatically lowers their break even point, which used to be about $60 a barrel. And it can be down now as low as $25 or $30. So that leads to very high expectations from the STACK and SCOOP plays this year. And also the lifting of the ban on oil exports is going to be a much bigger deal this year. We saw the first couple of those in late 2017. We expect to see a lot more this year.

McCleland: The one big change that's coming later this year is the change to Oklahoma's liquor laws. This is the result of a voter approved ballot initiative from back in 2016. First give us a little background. What changes with Oklahoma's liquor laws later this year?

Streuli: Well you're right. This came from State Question 792 and November of 2016. And it passed by a big margin, 65 percent voting in favor. So it effectively eliminates 3-2 or low point beer in the state. We'll see that go away. We'll only see regular strength beer. It'll be available cold in grocery stores, as will wine, both grocery stores and convenience stores. And in liquor stores, you're going to see cold full strength beer as well. They'll be able to put in refrigerators and they're going to be able to sell some non-alcoholic items. Those will be the biggest, most noticeable changes.

McCleland: Now behind the scenes, though, we've already seen some some changes to distribution. Just last month, Journal Record reporter Molly Fleming wrote Oklahoma City-based Central liquor and Republic National from Louisiana are partnering to create a new distributorship. She also wrote another longtime Oklahoma distributor, Jarboe Sales, has partnered with Florida-based Southern Glazer's Wine & Spirits. Why are these partnerships significant?

Streuli: Well, because the law changed and it completely changed the way alcohol gets out to the public in Oklahoma. So there used to be a broker involved and that was a requirement under the law. The broker system is no longer needed because the new laws allow alcohol manufacturers to sell directly to the distributors. So that completely changes the game on the back end.

McCleland: Let's talk a little bit about your neck of the woods. Downtown Oklahoma City, where your office is located. What are some public projects that will be completed downtown this year?

Streuli: Well, the one everybody's going to see first is the streetcars running around downtown. The testing for those is going to begin this year, but they're not going to be open for the public to use probably until the end of the year sometime in December. We're going to see the Will Rogers trail which is going to connect to the river downtown from Lake Hefner. That's going to be open this spring. The new park, the 70-acre downtown park, will still be under construction. That's not going to open till 2020 but we'll see a lot of work being done. The OG&E substation is in the process of being moved. Bank of Oklahoma, BOK, is moving into their new downtown tower this month, although that building will still have a lot of leasable space in it. And the other big thing we're going to see is that they're going to break ground on the new convention center in May or June, so more downtown construction. That's a little behind schedule but it's going to get going in the middle of this year.

McCleland: Ted Streuli is the editor of The Journal Record newspaper. As always great talking to you, Ted. Thank you so much.

Streuli: You too. Thanks Jacob.

McCleland: KGOU you and the Journal Record collaborate each week on The Business Intelligence Report. You can find this conversation at kgou.org. You can also follow us on social media. We're on Facebook and Twitter, @journalrecord and @kgounews.

The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.

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