Imagine if we had a giant pipeline from Canada to Louisiana.

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Elections have consequences.

Dropping oil prices could threaten U.S. fracking boom

BY SEAN COCKERHAM

McClatchy Washington BureauOctober 13,

VERNON BRYANT — MCT

WASHINGTON — Oil prices continued to collapse Monday and are getting closer to levels that could dampen the U.S. energy boom.

West Texas Intermediate crude, the U.S. benchmark, traded below $85 a barrel on Monday and has plummeted by more than 20 percent from this summer.

Raymond James energy analyst Pavel Molchanov said he thinks a drop into the $70 to $80 range could start triggering meaningful cutbacks in investment in U.S. production.

“I think there will be some spending reductions even now simply because companies are going to generate less cash flow at $85 a barrel than they did at $105,” Molchanov said. “But as far as a significant amount of more meaningful curtailment in activity, we’re not there yet.”

The U.S. is producing more crude oil than it has in nearly 30 years. Production is forecast to reach 9.5 million barrels a day next year, which would be the most since 1970, according to the U.S. Energy Information Administration.

The boom is a result of drilling shale rocks through the techniques of fracking and horizontal drilling, and the question is how high oil prices need to be in order to make it profitable.

The surging U.S. production is one of the reasons behind the worldwide oil price drop. Other factors include a weakening global demand for oil and the increase in Libyan oil drilling over the summer (the troubled nation managed to boost its output from 200,000 barrels a day to 900,000 by the end of September), according to EIA analyst Michael Leahy.

Leahy attributed weakening oil demand to lower than expected economic growth in Asia, especially China, and declines and stagnation in European countries.

Jamie Webster, senior director at the global energy consulting firm IHS, said he thinks that American oil producers can sustain a price drop to $80 a barrel for six months or so before making substantial cuts.

But no one is sure how companies will react, he said, because the shale boom is fairly new and the U.S. producers haven’t been tested in a sustained time of lower prices.

“For a lot of people in the market it’s really a period of discovery to try and figure out what is going to happen,” Webster said.

If oil prices keep going down and stay there long enough, though, it’s clear there will be an impact on the U.S. economy, Webster said.

“We will be benefiting from cheaper gasoline prices, but we will also be seeing a hitch. A lot of the job growth in the U.S. has come from oil and gas and related industries, and those will see the growth fall off or even starting to let a couple of people go,” he said.

The drop in crude prices is already having an impact on gasoline prices. The average price for a gallon of regular gasoline in the U.S. on Monday was $3.20, according to the AAA automotive club, down from $3.68 a gallon going into the Fourth of July weekend.

So far Saudi Arabia, in what could be an effort to keep rival U.S. producers from growing too much, does not want to lower its oil production to drive up prices.

But that could change if the prices go down too much.

The price of Brent crude, the international benchmark, fell to just over $88 a barrel on Monday, the lowest level in nearly four years.

Webster said an improvement in Asian economies could result in oil prices going back up, as could any additional sanctions on Iran or future instability in Libya.


Read more here: http://www.mcclatchydc.com/2014/10/13/2 ... rylink=cpy

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CSFMB 2014 Nascar Pick 'em Champion

We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much. — Ronald Reagan

I do not know if I believe that. Unlike OPEC I do not think our producers worry they are getting 75 a barrel rather than 90. That is as far as stopping production.

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Elections have consequences.

Rising Levels of Toxic Gas Found in Homes Near Fracking Sites

http://www.nbcnews.com/health/health-ne ... sk-n338146


Yay, Freedom!

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Good people drink good beer - Hunter S. Thompson

<º)))><

Waiting for the time when I can finally say
That this has all been wonderful, but now I'm on my way

I'm not an economist, but isn't it the fracking boom that is causing the collapsing oil prices?

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Freedom is our Strength.

Not so much an economic question as it is a production question.

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Yes

but should be an environmental question

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"That's what the internet is for. Slandering others anonymously." Banky
“Been that way since one monkey looked at the sun and told the other monkey ‘He said for you to give me your fuckin’ share.’”

I thought the OPEC producers were flooding the market with cheap oil b/c the frackers couldn't sustain profitability at these prices. That would be a real shame, I hope someone comes up with another way to poison the drinking water in North Dakota.

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Soccer 1,2,3
Spanish Honor Society 1,2,3,4
Forensics 1,2,3,4

"Smiles with Nostrils"

"...no Hmong, go find some blacks"

No and Yes.

The Saudis decision to run frackers out of business by cutting oil prices thru increased production on their end, is what caused oil prices to drop. Simply put, they can produce oil much more cheaply than a fracker can.

Their production decision has not had their desired effect.

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it hasnt?

fracking has been laying off workers for months now

saudis are ready to go years at these prices. they say "we can make it the cheapest, why should we keep the prices high?

i think by next year this time if they keep oil below 50 a barrel you will see a dramatic vanishing of fracking.

however, fracking technology itself will only get cheaper and who knows, a year from now they might only need 50 a barrel to turn a profit.

interesting stuff nonetheless. i agree with big though, i wish we had this much commotion over renewable green energies.

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the world will always the world. your entire existence is defined by your response.

No it hasn't Ike.

There hasn't been a significant enough reduction in fracking for them to be able to start desired price increases.

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did you read what you replied to secretion?

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the world will always the world. your entire existence is defined by your response.

We were told fracking would lower energy bills and prices at the pump. Now we are being told that if fracking measurably lowers prices it's no longer financially viable for the ultra rich and the middle class needs to pull it's weight and go back to $4/gal.

This is the kind of bullshit shoveled into the awaiting maw of the American public with the cynical expectation that we do absolutely zero critical thinking in regards to how illogical it is.

Working up here in ND, and talking to everyone about this while researching articles every day I've come to the conclusion that this down turn will last another year and a half. Once the down turn has been dealt with we could see oil sky rocket to $200 a barrel and gas prices rise to $5/gallon. What confuses me is the govt could and should take necessary steps to alleviate this problem. We could lift our export bans to china and other countries. We could also allow the keystone pipeline to pass which would on increase the total # of jobs in this country. If the oil field fails then the economic growth numbers go into the shitter.

I hate to say this as I have nvr votes republican, and nvr plan to, but once Jeb bush is our president we will see the oilfield issues resolved.

To Ike, oil production has not dropped significantly YET. We've gone from like 970,000 to 920,000. Now that number will only decrease once these oil companies begin to run out of wells to frack, but they are smart. A lot of the big boy oil companies I work for are fracking wells which take half the time to finish and moving quickly to the next well. These people are smarter than you think. They will ride this downturn out.

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they keystone pipleline puts 40k people (they say) to work. woo. and they forget to mention thats for about a year and then what do we have? very sick of hearing all this keystone pipeline talk. it is nothing more than the oil industry clashing with the rail industry. people need to stop thinking its about themselves because it isnt. if the keystone pipeline was really about people and jobs it would be a water pipeline to california period end of fucking story.

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the world will always the world. your entire existence is defined by your response.

That's cool.

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I have the same internal reaction to hearing people oil executives are smart as I do when I hear "oh you know Hitler wasn't a dumb guy." Exact same thing. Except I'm not sure Hitler is as evil as the energy industry.

my dads very common response to racial issues is "hitler never would have had this problem" or "if hitler won this wouldnt happen"

i dont even know what to say when he says it. it was funny when i was 12. 20 more years of the same jokes get old. someone should send him a letter notifying 1984 doesnt exist anymore

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the world will always the world. your entire existence is defined by your response.