As oil prices begin to plummet below $55 a barrel, the American fracking industry could likely take a significant hit, reported TruthOut. But what will come of it?
Shale gas fracking has reached a massive boom over the last 10 years as prospectors initially estimated massive shale gas deposits would last 100 years. There was one problem, however. There wasn’t any hard evidence to prove that estimation.
Nearly four years ago, the size of the shale gas deposits were reestimated and refigured from 2,560 trillion cubic feet to 750 trillion cubic feet, a decrease of approximately 300 percent. But that number was yet again refigured by the US Geological Survey, and they found that the amount of shale gas was actually 481 trillion cubic feet. In terms of the USGS estimates, the supply of shale gas went from 100 years, to just over 19 years.
Because of the overestimations, investors were quick to jump onto the fracking bandwagon as “Wall Street is now flooded with fracking industry derivatives contracts that protect the profits of oil producers from dramatic swings in the marketplace.” But therein lies another problem.
If fracking companies drop the prices of their fuel to compete with the plummeting prices of imported, Saudi crude, fracking companies wouldn’t break even and would go bust. The investment bubble surrounding the fracking industry would implode and possibly force another bailout. But why should we care if fracking companies fail?
Taxpayers should care because a secret provision slipped into the spending bill makes Americans vulnerable to another bailout paid for in taxpayer money, nullifying that protection written into the Dodd-Frank and Consumer Protection Act of 2010. Companies do irresponsible things, and we the People have to foot the bill.
This issue creates a very sticky situation. Should the fracking companies fail, taxpayers may be forced to bail them out. However, if the fracking companies keep drilling and operating, then that’s cause for severe environmental and human health ramifications.
Oil prices have plummeted because Saudi Arabia has created an oversupply of crude oil. There was consideration to taper oil prices in order to stabilize oil prices. However, Saudi Arabia said it will continue full production as a means to two ends. It disrupts US shale oil expansion by dropping prices so low that US companies can’t compete. The second reason being that it’s an economic attack on Iran, “whose oil export-based economy has been savaged by the lower prices.”
There is no black or white answer here. There’s good and bad with each different scenario. Low prices means affordable fuel, and the fracking industry could fail and stop damaging the environment. However, there is the possibility of a bailout, which we would pay for. If prices increase, we pay more for gas but the fracking industry will continue, but for only so long. Either way, the fracking industry will eventually fail, it seems.
With all this grey area, whose to blame? At the root of all this is big industry and corporate greed. They ravage the economy, the middle class, and the environment. No matter what happens, the People will suffer.