The U.S. Shale Oil Industry Bloodbath Spreads As Oil Price Meltdown Continues

Friday, December 21, 2018
By Paul Martin

By: Steve St. Angelo
GoldSeek.com
Friday, 21 December 2018

There is no better way to describe what is currently taking place in the U.S. Shale Oil Industry, then a bloodbath. Unfortunately, if the situation wasn’t bad enough for the shale oil industry when prices were 30-40% higher, today it’s a complete disaster. While some might think that a bit of an overstatement, I can assure you that these low oil prices are doing serious damage to an already weakened shale industry.

The major problem with the U.S. shale oil industry from the get-go was that the huge decline rates, indicative of horizontal fracking, devour a massive amount of capital. Furthermore, capital expenditures that are used to frack a shale well is a much different animal than building a gold mine. Because shale oil wells experience a 75-80% decline rate in the first few years, the industry must continue to spend even more capital to offset oil production losses. However, capital spent on a gold mine will last for 15-20+ years before the deposit is depleted.

So, capital spent in the U.S. shale oil industry is not really a long-term investment as would be a gold mine. Thus, the capital expenditures in the shale oil industry behave more like “COSTS” than “INVESTMENTS.”

The Oil Price Meltdown Continues

If energy analysts thought oil prices were getting a bit oversold last week, this week the market has now entered into a “Meltdown phase.” A few weeks ago, I published this chart showing the change in various oil spot prices since the peak in early October:

The Rest…HERE

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