Name:   MartiniMan - Subject:   Will the fracking business collapse? Date:   11/29/2014 8:45:36 AM

It's been an interesting few years with the U.S. oil production from fracking now up to about 1 million barrels per day.  It looks like OPEC for now is refusing to reduce production to prop up prices so crude is dropping like a rock.  Will be interesting to see how low OPEC will let prices drop before they curtail production or whether they will accomplish their goal of significantly reducing fracking production in the States. I have heard different numbers but the fracking break even is somewhere around $50 per barrel, although that varies widely with the reserve in question.  

If OPEC a holds firm watch for another blood letting in the oil industry like we saw in the mid to late 1980s. Would be a good time to pick up foreclosures in Houston.  We have lost several excellent employees to our oil company clients for more money, better benefits and no time sheet. The end could be near for them and as I told my leadership, we can't match the salaries or benefits of big oil but they will be back when the price drops......and it always drops. 

Now for those of you ignorant of history and natural resources prognosticators that claimed the price of oil would never go down, and you know who you are, all I can say is I told you so.  Every time we have a spike the chicken littles run around crying that oil will never go down ever again because of demand in China or India or reserves are drying up or whatever.  Trust me, when the economics work human ingenuity will get the 65 to 70 percent of oil locked up in known reserves out of the ground.......aka fracking and whatever the next technology will be to get what is left after fracking, unless hydrocarbons are replaced by some other form of energy that is reliable and cost effective.