#Oilprices continue to tumble to $40; fallout for Texas and #txlege?

Seven weeks ago, when I created my latest quarterly poll on oil prices, as shown at right, I was definitely being more conservative than Wall Street bulls. But, I thought I had potential price ranges pegged about right.

Little did I know.

Oil prices have given up $15/bbl in that time period, falling to a low not seen since the Great Recession.

Neither the bulls nor I foresaw one thing: that China would officially admit its economy is struggling. That, in turn, sawed some floor from underneath the bulls and has become a bit of a self-fulfilling prophecy.

Nobody knew for sure about any Iran deal at that time, though I expected something to happen, and bulls certainly should have. But, maybe I should have made even more allowance for that.

ISIS turned out to be — so far — overstated as a threat to oil prices.

Other market fundamentals, such as Gulf states within OPEC, above all Saudi Arabia, seeking to control supply and pricing, remain unchanged. So, too, does current North American unwillingness to let that fact fully take root.

That said, I and other bears appear to be right overall.

Analysts are predicting supply will remain high and prices relatively flat not just for the rest of this year, but two-three years ahead. That's in part because, sometime in that period, but nobody is sure when, more Iranian oil will be coming in market. (Maybe this is why Texas Ag Commish Sid Miller supports "Muslim peace" with nukes; see here for more.) It's a more severe version of George Bush's idea 15 years ago on oil price control.)

Meanwhile, a sub-$40 floor for oil prices is being discussed by many people.

What's this mean locally?

1. Texas state-level elected officials need to pull their collective heads out of their asses. (But they probably won't for some time.)

2. This is more clear proof that Texas needs an every-year Texas Legislature. It's ridiculous that the only way to deal with this is via a special session, and that in Texas, only the governor can call one.

3. Banks and other lenders will be calling in more loans, which could have a domino effect.

4. Investors, per that link above, will remain skittish about oil because of volatility.

5. A recession in Texas is more likely unless No. 1 happens, and soon.

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There's other talking points here.

1. Even if the US, or at least Texas, were a unified, state-controlled market, it's still not Saudi Arabia, despite puffery of the last couple of years.

2. Besides the Saudis as the biggest swing producer, China must now be viewed for the next 18-24 months as the "swing consumer" par excellence. The US economy is so big, and so oil-dependent, that a stutter won't affect demand too much. But, a true recession in China would probably ding world oil demand pretty good.

3. What's continued $40 oil mean in Russia? I certainly don't want to poke Vlad the Impaler Putin with a sharp stick, but it's a very serious issue.