Posted 2 weeks ago on Sept. 4, 2017, 1:45 p.m. EST by flip
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US Shale Oil Production: While Hurricane Harvey did little actual damage to the Eagle Ford shale oil fields in south Texas, some production has been shut-in by the damage and flooding of oil pipelines, export terminals, and other means of moving the oil to refineries.
Observers are beginning to note that the US shale oil industry, which is being touted as the route to energy independence, is nothing more than a giant Ponzi scheme that consistently loses money no matter the price of oil. US shale oil companies have collectively lost money from 2008 through 2016 no matter what the price of oil was. Production from shale oil wells depleted by approximately 85 percent in three years leaving little behind for multi-million dollar investments. Despite the hype about new efficiencies, the 60 largest shale oil firms collectively have been losing about $9 billion per quarter for the last five years and with the well-head price of shale oil still running about $40 a barrel, it is doubtful the situation will get better in the near term.
The secret of the shale oil revolution that has increased US oil production by millions of barrels per day is that shale oil costs too much to produce. Unless shale oil starts selling for well above $100 a barrel and stays there — a situation that the US economy likely could not stand – the industry is living on borrowed time.
To expect that shale oil will lead to US into a new era in the next decade is wishful thinking given its record of profitability during the last ten years. While there may be some short-term gains in production at the expense of investors, at some point Wall Street will stop pouring billions into what was always a losing proposition.