Is cheaper driving here to stay?
Gasoline may stay cheap until we burn through the current market glut in perhaps a year.
The Texas shale drilling industry was supposed to keep us driving normally forever, or at least until the economy could recover enough so we could afford to make a transition to electric cars, right? Everyone connected to Wall Street and its financial followers with any media influence were saying that only about a year ago. Then the global oil price gradually collapsed from over $100 a barrel in mid-2014, down to its current price of about $45.
The reason that the Texas shale drilling boom is now in a state of deep decline and won’t easily bounce back is that shale drilling is losing money. Shale oil really needs $80 a barrel or above to break even in the context of fast well decline and shrinking number of sweet spots left to drill.
Shale drillers must keep producing oil at a loss because of their largely junk bond financing.
…click on the above link to read the rest of the article…
