Energy Crash - 97% of Fracking Now Operating at a Loss at Current Oil Prices

[xchrom]

http://www.alternet.org/economy/97-fracking-now-operating-loss-current-oil-prices


If the Saudis wanted to crush America's shale oil industry they are certainly doing a good job of it.

West Texas Intermediate reached a 2014 peak of $107.73 in June before dropping as low as $49.77 today on the New York Mercantile Exchange. The grade settled at $50.04 a barrel. That’s below the break-even price for 37 of 38 U.S. shale oilfields, according to Bloomberg New Energy Finance.

Shale oil fracking and Canadian tar sand is some of the most expensive (and dirty) oil production on the planet, while conventional Persian Gulf oil is the cheapest to produce.

Warren Henry, the spokesman for Continental, one of the frackers who have been spending money faster than they can make it, says that current oil prices are “not a sustainable long-term trend.”
However, Bob Tippee, Editor of Oil & Gas Journal, has a different take.

"The Saudis have no incentive to lower supply to defend the price of crude oil, that is kind of a given right now, so the Saudis are not going to rescue the market," said Bob Tippee, Editor of Oil & Gas Journal.
It won't come from other major producers either. Both Russia and Iraq have boosted oil production to their highest levels in decades.

So it seems certain that low oil prices are here to stay. At least for now.
And that's bad for the oil patches of red states like Texas and North Dakota.
Some are projecting 100,000 layoffs in the energy sector. Texas is certain to take some lumps.

The slump may push Texas into a “painful regional recession,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, wrote in a Dec. 18 report.
Texas pumps 37 percent of U.S. oil output, EIA data show. The oil and gas industry accounts for 11 percent of the state’s economy, according to Feroli. The effects may extend to housing and other businesses, he wrote.

[AngryAmish]

1. It does not matter.

The shale petroleum industry could go belly up. But the gas is still there. The leases will be sold in bankruptct court, the equipment put in storage. People will lose jobs (and now is a good time to short sand futures and real estate in Dallas). When The House of Saud turns off the spigot, the new owners of the leases will find a drilling company, the equipment gets a looking over and returns to the field, etc.

We have been held by the curlies long enough by various tyrants and monarchs. I am so glad the Ovama is telling them to fuck right off, allow them to soil there own nests with their backward, inbred thinking and allow us to wash our hands of that shithole of a region.

[Fred Sanders]

3. I read that energy extraction is 7% of Texas GDP and less than 2% of national GDP, it is going to

hurt folks in the energy extraction industry, but what about the millions of Texans saving an average of 1200 dollars a year per family on gas?

That is an instant tax cut and stimulus...I think folks do not realize how much of an economic stimulus this type of energy cost reduction and it includes gas, aviation gas, diesel, hearing oil, would have on any economy, let alone the mass consumption American economy.

[Fred Sanders]

2. It is a good thing for all but the oil barons and their investment bankers. Sorry about the job

losses in the oil patch, many new people hired by the gas cash savings and spending of grateful regular driving folk in retail and manufacturing and transport thank you for your sacrifice.

Low energy prices are a good thing, in so many ways, do not let the fucking corporate media that get millions a year in oil ad money whine their way into getting you to think any different.

[Scuba]

4. Crushing the shale industry is good cover ...

... for punishing Putin.

[2naSalit]

7. Could end up

solving numerous "problems" all in one price drop. Damaging the shale cabal (Kochs and friends), shaking up Putin's rock of Gibraltar... other issues we may know less or little about that are directly related to a global oil-based economy. Much of what ails humanity is tied to oil and the $$ it generates along with many ills associated with concentrated wealth centered on an immoral caste.

If enough can be motivated to steer the economic ship toward safe harbor by transitioning to more sustainable existence during this oilprice reprieve, I think we could shake down the global oiligarchy. It's worth a try, now is the time to make use of the opportunity that is at hand.

[HereSince1628]

10. I also suspect it's a matter of many things adding together to support this policy

But I suspect those things don't facilitate steering toward a long term sustainable energy future.

[2naSalit]

11. Indeed.

The second part is purely wishful thinking on my part. But I thought putting such ideas out there couldn't hurt.

[newfie11]

5. Anything that stops fracking I'm for.

I'm sorry for the folks that would be out of work but this distruction of land, poluting chemicals, and depletion of precious water needs to stop.

[marions ghost]

6. +++++ditto

[edhopper]

8. Just think what would be happening

if the country was investing in renewable energy instead?

[madokie]

9. These are big games

not in the sense of playing monopoly either. These guy are looking at long term not just the present. Fracking must stop right now. What we need to do is build wind turbines and cover ever roof in america with solar cells and cut down on our dependence on Oil and Coal