In recent weeks, U.S. oil companies have announced $8.3 billion in cuts in capital expenditures for calendar 2015, primarily because oil prices have declined some 50 percent in the last year.

Capital expenditure in the oil sector has represented a significant portion of overall American capital expenditures.

Jason Thomas, director of research at the Carlyle Group, stated to a House Subcommittee that “between 2009 and 2014, investment in structures and equipment for oil- and gas-field exploration accounted for 70 percent of net industrial investment in the U.S.”

Fortunately, outside of the energy sector, capital expenditures remain promising. Tobias Levkovich, chief U.S. equity strategist at Citigroup, predicted that capital spending will grow 4 percent for S&P 500 companies this year.

For steel producers, the decline in capital spending by the energy sector is a two-edged sword. Bill Hutton, president of Titan Steel Corp., in Baltimore, said: “It’s a very clear case of short-term pain and, we hope, long-term gain.”

On the one hand, the energy sector has been as big a domestic consumer of steel as the automotive industry in recent years. On the other hand, the steel industry should benefit if consumers spend more on cars, refrigerators and washing machines.

Glum news in the oil patch is generally good news for Main Street. Economists at JPMorgan Chase expect lower oil prices will add one percentage point to our GDP. Savings on oil prices should encourage consumers to spend more at retailers and restaurants. In addition, reduced oil prices will reduce material costs.

Oil executives have described their predicament in bleak terms. John Rynd, chief executive of Hercules Offshore Inc., told investors last month: “It is bare bones, but we can get barer. This is not a time where you paint things or you buy new things.”

Clayton Williams, chief executive of Clayton Williams Energy Inc., told investors that a recent round of cuts was “similar to Dunkirk,” referring to the evacuation of Allied soldiers from French beaches in World War II. “We’re doing what it takes to survive.”

These companies exemplify the steep capital expenditure declines:

ConocoPhillips, down 33 percent.

Occidental Petroleum Corp., down 33 percent.

Hess Corp., down 16 percent.

Despite the reduction in capital spending, ConocoPhillips and Occidental plan to achieve production growth. For example, Conoco provided a production guidance of 2 to 3 percent growth in 2015. Occidental plans to expand production 6 percent to 10 percent.

Because the energy sector represents about 17 percent of high-yield debt outstanding ($178 billion), the decline in oil prices foretells heavy tidings for some company. A number of energy companies — Quicksilver Resources Inc., BPZ Resources Inc. and Dune Energy Inc. — have filed for bankruptcy.

Will oil prices spike back up? In all likelihood, not rise significantly.

Under what scenarios could we witness an oil-price spike?

Middle East unrest spreads to Saudi Arabia.

Russia agrees to cooperate with the OPEC nations to curtail production.

What is the most probable outlook for energy prices?

In March, the U.S. Energy Administration forecast that West Texas Intermediate oil will average $50 and not rise toward $100 this year. Their conclusions rested on the following assumptions:

U.S. oil production will remain high for the balance of the year.

Oil inventories are at almost record highs. As of March 11, according to the Energy Administration, nationwide stocks were at 466 million barrels. This is by far our greatest oil inventory since 1930. So far in 2015, the U.S. has added almost 1 million barrels a day to its stock of crude supplies, and U.S. energy companies are producing so much crude oil they are running out of places to store it.

So it is most likely that low oil prices, and their fallout, will continue for some time.

Originally published in the Sarasota Herald-Tribune