Rosy Glow Begins To Fade For Oil
Ellen R. Wald, Ph.D | Jul 01, 2015 11:25AM ET
Ever since OPEC cut oil prices drastically last November, we have been bombarded by messages not to worry because the U.S. shale revolution is going strong.
Oil is below $60 a barrel? No matter, says Continental Resources, American frackers are the new powerhouse.
Worried about fracking companies making a profit when their costs are so much higher than Gulf oil states? Technology to rescue, say analysts Donald Luskin and Michael Warren. Drilling costs have decreased so significantly, they claim, that shale producers can not only survive but thrive at sub-$60 a barrel oil.
Bloomberg reported that 42 out of 62 companies tracked in its index are now rated at “junk.” Turns out, contrary to what the media and the drillers want Wall Street to believe, shale oil companies can’t actually respond quickly to price swings. More and more companies are auctioning off equipment every week, making it clear that they don’t see a rosy future.
And neither should we.
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