Cheap Gas and the Arts
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
Cheap Gas
-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.
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