The Coming Year: More Tension Spouts in Oil World in '99

About the only thing rising in the oil patch these days is the tension between oil-service companies and their oil-producing customers.

The two groups have long subsisted on a symbiotic relationship, with oil companies saving money by farming out work and oil-service companies readily supplying gear, expertise and labor in exchange for generous profit margins. But oil's pitiful price is subtly changing this, slowly creating an environment in which companies look out only for themselves.

Oil companies are breaking drilling rig contracts and refusing to reimburse cost-overrun claims, a scenario similar to General Motors' (GM Quote) tack earlier this decade when it infuriated suppliers. In return, service providers are threatening legal action against some of their largest customers. ...