Quote:
Originally Posted by thickstunalex
I remember when I had my Pontiac GTO and filled the tank with 93 at $4/gal. I rang up $70 at the pump. The GTO was also my daily driver, and I drove a lot.
Flash forward to now, and we have much more domestic production to offset crazy-high fluctuations. My 2SS is much more fuel efficient than the GTO, and adds 55 extra hps.
Cheap oil was nice on our pockets, but the whole premise behind it was OPEC wanted to kill of the new shale market in the US. They wanted to see us out of business so they could gain back control of the oil market. They failed...
It hurt 3rd worlds nations the hardest, and ruined Russia's economy who's government is 70% vested in oil profits. All the while OPEC was watching to find out just how resilient American domestic production was. Some jobs were lost and production cut, but none of the companies folded under. Oh, and Americans are depending less and less on fossil fuels each year. Automobiles across the line are getting more fuel efficient. We have a greater energy production portfolio of natural gas, wind, and solar now.
OPEC can no longer control the world oil market like they did in the 1970's. We should actually be rejoicing!
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Excellent post, BUT, a lot of companies (smaller ones that borrowed a lot of money to get going) went out of business, and there have been a ton of layoffs in the fracking areas. There has been very little new drilling in the last year. Production went down a bit as existing wells start to produce at lower levels. But new well drilling has all but stopped, putting a lot of folks out of business and out of a job.
BUT, when a startup company that had huge loans goes bankrupt, the debt gets wiped out and the assets (equipment and leases) get sold off to help pay some of the debt off. The company that buys the remnants can now produce oil on that same patch of land for less money, because they don't have to service a big loan like the original company. So the break even price for fracking in that area gets lower. Also, in a lower price environment, everyone is trying to produce more efficiently. This also lowers the break even price.
So, there has been a lot of pain in the energy sector, but the net effect is that the Saudi's were not able to kill unconventional oil. It got knocked down, and got back up more efficient than before. But that doesn't mean there weren't bankruptcies or layoffs. There were a lot of them. Just not enough for the Saudis liking.
