[quote=EconProf]
As Svelte points out, our oil production has increased because of fracking by more than the total increase by all OPEC nations.
Another result of our fracking revolution has been the attempt by the Saudi’s to kill our fracking by going all out on their production in order to keep world oil prices down. Their thinking is that, since fracking wells start to become uneconomic when prices fall too much, they would drive American fracking operations out of business. In fact, many of our wells that need a $50 or more price of oil to break even have already shut down. Some that have a breakeven point at $40 or $30 are still open. There is a one-time expense to either shut down or reopen such a well, so some are still producing at a small loss in hopes prices have bottomed out and will keep recovering, as they have lately.
BTW, it is nice that we have lots of wells shut down that could reopen if prices climb above $50. That will put somewhat of a damper on price hikes in the future.
Obviously, other factors are also keeping oil prices down, such as weak demand from the worldwide growth slowdown.[/quote]
Many of the companies in this space borrowed tons on money to buy equipment and they will likely be bankrupt at some point. What the creditors do with the well assets remains to be seen. Probably Exxon or Chevron will buy them for pennies on the dollar and will be able to produce those fracking wells at $20 or $30/barrel profitably because they bought the assets so cheap.
