Tuesday, October 28, 2014

Derek Thompson — It's Coming: $65 Oil

Gas prices are falling below $3 a gallon across the United States for two big reasons: (1) the world economy is growing slower that we hoped, and (2) global oil production is improving faster than we expected.
The Atlantic
It's Coming: $65 Oil
Derek Thompson


Dan Lynch said...

So the fracking bubble will burst, imports will increase, and demand leakages will increase.

I wonder how our fragile economy will react to that?

Dan Lynch said...

I was talking to North Dakota producers, and they’ve said their cheaper wells are okay down to $25 and their higher-cost wells are okay down to $45, because some of their losses would be protected under the federal tax code." Dakota firms might not drill new wells under that price, but “they can probably survive down to pretty low levels.”

Even if that's true (I don't believe it), it's the borrowing of money to drill new wells that stimulates the economy and creates jobs.