{"id":11939,"date":"2015-09-07T07:47:39","date_gmt":"2015-09-07T12:47:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11939"},"modified":"2015-09-07T07:47:39","modified_gmt":"2015-09-07T12:47:39","slug":"how-fracking-changed-the-economics-of-oil-production-around-the-world","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11939","title":{"rendered":"How Fracking Changed the Economics of Oil Production Around the World"},"content":{"rendered":"
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How Fracking Changed the Economics of Oil Production Around the World<\/a><\/h3>\n

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James Meadway<\/a>, chief economist at the New Economics Foundation, explains the interrelated economics behind China\u2019s ‘Black Monday’ stock market crash, Middle Eastern oil and\u00a0US<\/span>\u00a0fracking.
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The ‘fracking revolution’ has transformed the economics of oil production globally, with the\u00a0US<\/span>\u00a0becoming a bigger producer than Saudi Arabia and \u2013 after decades of dependency on oil imports \u2013 even being able to export some of its surplus\u00a0production.<\/p>\n

US<\/span>\u00a0shale oil is unusual, too, in being privately owned: most of the world\u2019s oil reserves (over 70 percent) are in state hands. Like the North Sea 30 years ago, in a world dominated by state-owned companies and publicly owned reserves,\u00a0US<\/span>\u00a0shale could look like a new frontier for private operators on the search for fat\u00a0profits.<\/p>\n

New technology, high oil prices, and plentiful cheap credit have encouraged the boom. Some $200bn has been borrowed to invest in fracking in the last few years,\u00a0accounting for 15 percent of the entire $1.3tr\u00a0US<\/span>\u00a0junk bond market<\/a>. Investors were, in effect, betting on continuing high oil prices making their investments profitable for years to\u00a0come.<\/p>\n

Price\u00a0Slump<\/strong><\/p>\n

Last year\u2019s slump in prices trashed that calculation. From a mid-year high of $115 per barrel, by the end of 2014 the price per barrel had fallen by more than 40 percent.\u00a0More than half of\u00a0US<\/span>\u00a0shale rigs have been laid up since\u00a0October.<\/a><\/p>\n

The driver, last year, was the behaviour of\u00a0OPEC<\/span>\u00a0\u2013 the Organization of Petroleum Exporting Countries.\u00a0OPEC<\/span>\u00a0is a cartel agreement among major oil producers that seeks to manage the international market for oil. With oil prices already plunging over the summer,\u00a0OPEC<\/span>\u00a0could be expected to ease off on production. Restricting supplies should, thanks to the magic of the market, produce a decent increase in the sale price of oil. Instead, with Saudi Arabia taking the lead,\u00a0OPEC<\/span>decided to continue production levels.\u00a0No agreement on restricting output could be reached.<\/a>\u00a0Prices\u00a0slumped.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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How Fracking Changed the Economics of Oil Production Around the World James Meadway, chief economist at the New Economics Foundation, explains the interrelated economics behind China\u2019s ‘Black Monday’ stock market crash, Middle Eastern oil and\u00a0US\u00a0fracking. The ‘fracking revolution’ has transformed the economics of oil production globally, with the\u00a0US\u00a0becoming a bigger producer than Saudi Arabia and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[5317,3125,331,412,500,505,1397,3044,1775,595,600,701,1358],"class_list":["post-11939","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-desmog-blog","tag-desmog-uk","tag-fracking","tag-hydraulic-fracturing","tag-market-collapse","tag-market-share","tag-oil-boom","tag-oil-glut","tag-oil-price-collapse","tag-oil-production","tag-opec","tag-saudi-arabia","tag-us-shale"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11939"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11939\/revisions"}],"predecessor-version":[{"id":11940,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11939\/revisions\/11940"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}