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Re: Shale's Debt-Fueled Drilling Boom Is Coming To An End 

By: Decomposed in POPE 5 | Recommend this post (2)
Fri, 06 Dec 19 2:48 PM | 49 view(s)
Boardmark this board | Pope 5 		Msg. 46278 of 62138
(This msg. is a reply to 46255 by capt_nemo)
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Nemo:

Re: "Shale's Debt-Fueled Drilling Boom Is Coming To An End"This is a very important story, one that I intended to discuss with you guys a few weeks ago. The simple fact is, Peak Oil *is* real. Fracking staved off its effects. But fracking is UNSUSTAINABLE.

Here's what's happening: Frackers aren't making money. The well costs are enormous, and while the wells produce a lot of gas, they are short-lived. The only thing that has kept the industry going are the artificially low interest rates that have allowed the companies to refinance time and again. They can't continue to operate this way: the rates aren't going to keep falling. (Sub-zero interest rates have been tried and shown to not work. They breed fraudulent lending.) As the article says, Chesapeake Energy has already dropped the bomb that it may not be able to continue. That tells the story for the industry.

Your article focuses on Appalachian firms, but the problem is systemic. Fracking wells are almost never profitable. Not anywhere. To the best of my knowledge, the boom in CONUS oil production is derived chiefly from fracking. I don't know of a single company that is very productive without it. (Perhaps one of you do. If so, please name it.) The U.S.'s current oil glut is temporary and will come to an abrupt end if interest rates go up.

Here's the kicker: There are numerous signs that price inflation is about to hit our country in a big way. Brace yourselves for that. When it does, interest rates will have to go up. And when THAT happens, energy - which drives everything else - prices will skyrocket. Is this finally TEOTWAWKI? It might just be.

Keep an eye on gold. It is a very good leading indicator of economic uncertainty. If its uptrend accelerates and, especially, if it sets a new high, we'll know if, when and how bad a downturn is coming.




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Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months

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The above is a reply to the following message:
Shale's Debt-Fueled Drilling Boom Is Coming To An End
By: capt_nemo in POPE 5
Fri, 06 Dec 19 10:21 AM 		Msg. 46255 of 62138

http://feedproxy.google.com/~r/zerohedge/feed/~3/dRX6O-FGIsA/shales-debt-fueled-drilling-boom-coming-end

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