It's simple business 101. They borrowed a lot of money to go fracking. Once the prices fell, they didn't make enough money to pay back the money they borrowed so they went bankrupt. That cheap oil was on the backs on Wall streets lenders who took a loss when those companies went under. They're not going to play the same game twice and the ones who didn't go under aren't going crazy with fracking again. Other countries also have more control over their oil production and the US costs to produce oil are much higher. Other countries can make money at oil down to $5 a barrel, I think the US break even was more like 40-60 with fracking.
Is Inflation Going To Cripple The Economy ?
- Thread starter Warstud
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OK then why is the current Amin. stopping the keystone pipeline and future exploration??? but then they ask OPEC and Russia to increase production..
Well now you might be getting into politics. But let's just say there are short term and long term solutions. The pipeline and future exploration is a long term issue. That's not going to help with the price of oil in the short term no matter what happens. Basically you're trying to play the blame game without understanding how the game is played. The price of a barrel of oil has been higher in the past and we're still not at that point yet. It's not really part of inflation, there's a separate game going on with oil which is why I don't tie it to current inflation problems.
I respect your opinion but still dont understand what this Admin is doing when it comes to oil...I will leave it at that...
Nope
Let me put it like this, cancelling the XL extension has nothing to do with current prices. It was 8% complete when cancelled and years from being operational.
Do you really not understand that there was very little demand last year? Price of oil tanked, no demand, now we have demand and they can’t ramp back up quick enough
JHZR2
Staff member
How many of those were offshored to the third world in that time?
What's there to understand? Do you think the admin has much to do with the price of oil? We're not some 3rd world country where the government controls the price of oil bought by their citizens. It floats with the world market. There's only so much the government can actually do and historically it does very little to actually have a solid effect on the price of oil. What exactly did you expect it to do and what do you want it to do?
So, you don't understand that the large increase in the price of oil is a major component of inflation? Really??
Simple economics. When input prices (fuel) double, the shipped goods will increase by some portion to recoup the increased input costs.
Heck, yeah, the government influences (not controls) the price of oil through policy and regulation. Locking up and canceling oil leases en mass definitely has an impact on the supply side of the oil market and it also has an outsized psychological effect on the market.
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