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Where are you getting the information that stop/start is inefficient and costly for fracking? It's less than conventional oil wells. I've found a significant co

Where are you getting the information that stop/start is inefficient and costly for fracking? It's less than conventional oil wells. I've found a significant cost of fracking is establishing the wells. If the price goes up that much, fracking is viable and will happen. The only way fracking is out of the equation if when low prices keep it from being profitable. Fracking presently functions as a cap on the price. If prices vary wildly, then there are strategies to deal with that, and the variation needs to be explained. How does it come down so rapidly? Assuming healthy economics, probably because of fracking. It doesn't make sense to say that market prices aren't demand driven just because other costs and factors exist. If suppliers will lose money at a given low price because of costs, eventually supply decreases and prices rise, etc.

madaxe_again 10y ago
Info mostly comes from banter with energy market traders who are getting ready for a mixture of feast and bloodbath. I used to work a futures desk, mostly on intermediates. I got a decent sense of the market in those few years, and watching it is an ongoing pastime. Re: the specifics around fracking start/stop - it's staff. You either retain salaried workers who are unproductive for stretches, or you work contractors, which is expensive. Either way it drives up cost. Re the demand driven bit - I explained that poorly. Oil is a very "special" commodity, in that it has spectacular investment costs, incredible levels of state funding (and debt), and a price determined by anticipated demand more than anything else I'm aware of - you need only look at the volume curve across futures to see this - and the fact that we are still in a contango market. This adds up to the price of oil being driven by overall economic growth forecasts, which are theoretically demand, but aren't. This results in expenditure (exploration and exploitation), which has a several year time lag. Fracking has been oh-jesus expensive and may never turn a profit. Investors (states) are getting shy. I'm still explaining this poorly - I'd need to write an essay to convey what I'm trying to get at - there are a few dynamics at play and I will be amazed if we don't start seeing even more instability. Confidence in the market is very, very low. Talk to traders, not what the press says. Of course the press says it's rosy - nobody wants a premature sell-off, even if there could be some tasty dead cats in it for the vultures. We still need oil for energy for the time being.
- Gibbon1 10y ago
  I like how you got down voted for reporting your first hand knowledge. I used to deal with a guy in the oil business. Reselling valves pumps and misc plumbing. Nothing in that business is cheap. Just remembered, Shell? did a drilling project few years ago in northern Canada. Spent $2 billion to drill deep wells into what looked like a large reservoir of oil and it was dry. And that wasn't $2 billion in paper funny money, that was $2 billion spent on stuff.
  - madaxe_again 10y ago
    Nah, everything is clearly totally fine, and I, like the energy markets, are wrong. There has always been oil and demand for oil. There will always be oil and demand for oil. Oil without end. Or not: http://www.salon.com/2016/04/29/there_will_be_pandemonium_partner/ http://www.salon.com/2016/04/29/there_will_be_pandemonium_pa...

madaxe_again 10y ago

Info mostly comes from banter with energy market traders who are getting ready for a mixture of feast and bloodbath. I used to work a futures desk, mostly on intermediates. I got a decent sense of the market in those few years, and watching it is an ongoing pastime. Re: the specifics around fracking start/stop - it's staff. You either retain salaried workers who are unproductive for stretches, or you work contractors, which is expensive. Either way it drives up cost. Re the demand driven bit - I explained that poorly. Oil is a very "special" commodity, in that it has spectacular investment costs, incredible levels of state funding (and debt), and a price determined by anticipated demand more than anything else I'm aware of - you need only look at the volume curve across futures to see this - and the fact that we are still in a contango market. This adds up to the price of oil being driven by overall economic growth forecasts, which are theoretically demand, but aren't. This results in expenditure (exploration and exploitation), which has a several year time lag. Fracking has been oh-jesus expensive and may never turn a profit. Investors (states) are getting shy. I'm still explaining this poorly - I'd need to write an essay to convey what I'm trying to get at - there are a few dynamics at play and I will be amazed if we don't start seeing even more instability. Confidence in the market is very, very low. Talk to traders, not what the press says. Of course the press says it's rosy - nobody wants a premature sell-off, even if there could be some tasty dead cats in it for the vultures. We still need oil for energy for the time being.

Gibbon1 10y ago
I like how you got down voted for reporting your first hand knowledge. I used to deal with a guy in the oil business. Reselling valves pumps and misc plumbing. Nothing in that business is cheap. Just remembered, Shell? did a drilling project few years ago in northern Canada. Spent $2 billion to drill deep wells into what looked like a large reservoir of oil and it was dry. And that wasn't $2 billion in paper funny money, that was $2 billion spent on stuff.
- madaxe_again 10y ago
  Nah, everything is clearly totally fine, and I, like the energy markets, are wrong. There has always been oil and demand for oil. There will always be oil and demand for oil. Oil without end. Or not: http://www.salon.com/2016/04/29/there_will_be_pandemonium_partner/ http://www.salon.com/2016/04/29/there_will_be_pandemonium_pa...