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It mainly puts a price ceiling on oil. Fracking can be turned off or on on relatively short notice. Anytime the price dips too low, those rigs can be idled. If
by hangonhn 8y ago
It mainly puts a price ceiling on oil. Fracking can be turned off or on on relatively short notice. Anytime the price dips too low, those rigs can be idled. If OPEC raises prices above breakeven for fracking, the rigs turn back on and pushes the price back down.
- hnnh44 8y agoCan you provide a source for how this works? AFAIK the u.s. doesn't operate the oil rigs, and oil companies will operate in their own self interest. Does the u.s. government pay oil companies to suspended operation?