Shawn Tully says the fracking revolution is in trouble:
The recent drop in oil prices poses a major challenge to the frackers. But oil producers, Wall Street analysts, and most industry experts claim the setback will be brief and minor.
Don’t believe them.
The basic economics of fracking—what it costs to drill versus what oil now sells for—spells big trouble for the shale boom. At best, today’s producers may be able to hold production close to current levels. What’s gravely endangered is the advertised bonanza that virtually everyone deemed inevitable just a few short months ago.
If the frackers can at least continue producing at current levels, then we’ll avoid what looks to me like the biggest danger to the recovery. If the bottom drops out of oil prices for a sustained period, then all bets are off — just like any other resource-dependent banana republic.