All errors should be reported to

Wednesday, June 03, 2015

Oil boom continues

Hydraulic fracturing has leveled the playing field. No longer do tyrants in OPEC control the price of oil. The United States now produces half the oil it consumes (and most of that oil is not used in gasoline) and there is no turning back. Even with oil prices cut in half, U.S. production continues at its highest level in 45 years because the costs are still below the price in the United States.

Not so elsewhere in the world. Goldman Sachs estimated Iran’s total break-even cost at $133 per barrel. Russia’s is $107, Iraq’s is $101.

The price is now $60.

Far from scaring American investors, it emboldens them.

From Dow Jones:
Wall Street's generous supply of funds to U.S. oil drillers helped create the American energy boom. Now that same access to easy money is keeping them going, despite oil prices that are languishing around $60 a barrel.
The flow of money into oil has allowed U.S. companies to avoid liquidity problems and kept American crude production from falling sharply. Even though more than half of the rigs that were drilling new wells in September have been banished to storage yards, in mid-May nearly 9.6 million barrels of oil a day were pumped across the country, the highest level since 1970, according to the most recent federal data.
Helped by a ready supply of money, the flow of oil from the U.S. could keep crude prices low for the remainder of 2015 and beyond.
OPEC screwed up. It thought by flooding the market and dropping the price, they could run off the American capitalists. However, the government-run operations are inefficient and they are losing billions because of cheap oil. Meanwhile, by maintaining low oil prices, Americans may run off the foreign competition.


  1. Ironically, Obungler will take credit for the fracking boom even as he tries to figger out how to stop it.

  2. Yeah, but we'll know he's lying.

  3. So far as I can tell, a well financed environmentalist cadre have successfully muted the trumpeting of fracking's success to the general American public.

    1. Bureaucratic Rule #2: It doesn’t matter what you say or do, it’s what you get credit for that counts.