4 ms·
It was always expected that the tight oil bonanza would be temporary, a few decades at best, a way for the oil industry to be "scraping the bottom of the barrel
by BlueTemplar 6y ago
It was always expected that the tight oil bonanza would be temporary, a few decades at best, a way for the oil industry to be "scraping the bottom of the barrel" and to have its "retirement party".
And of course, if one believes in climate change, it should never having been allowed to proceed.
To make matters even worse, AFAIK USA's tight oil industry, taken in aggregate, has never been profitable so far, and at this point it doesn't seem like it will ever be. So this is yet another an example of bad investing, a financial bubble yet to pop, propped up by Wall Street money, which itself comes from the relief money that went up to prop up the "too big to fail" banks after the previous financial bubble popped.
- boringg 6y agoOil and gas is a capital destroying market by its very nature. Always a bad investment in the long run.
- alisonkisk 6y agoWriting off capital as unusable is also capital destroying.
- i_am_proteus 6y agoThe entire global industrialized economy only exists because of petroleum fuels.
- Retric 6y agoThe industrial revolution significantly predates oil. Oil become a huge deal because it’s extremely plentiful and produced a huge range of waste streams people found a use for. Essentially the primary use would drive new extraction which would lower the price of every other output. However, there are drop in replacements for everything oil does outside of arguably aviation.
- newsclues 6y agoThe industrial revolution and the 20th century consumer culture would not have left the mark on the world it did if not for the fuel on the fire of petroleum. Pumping gas is a big deal. It gave us private cars and suburbs and endless roads and parking lots that would not exist if we had to rely on coal.
- i_am_proteus 6y agoThere are drop-in replacements for aviation, too, in the form of biofuels. Nonetheless, the modern industrialized economy was built on the back of shipping that was only initially possible via petroleum fuels.
- Retric 6y agoBefore oil we had coal ships, coal trains, coal steam shovels, coal tractors, etc and even electric trolley from both hydroelectric and coal power plants. Before electricity we had air pressure tools, and before that rotating shaft power from water wheels. I bring that up because IMO people overestimate how much and how quickly things have changed.
- BlueTemplar 6y agoAnd sail ships, still plentiful in the early years of the 20th century.
- beerandt 6y agoThe tech isn't as important to the economy as much as the ability to scale, given current (or historic) technological costs. Transistors theory and gate logic haven't fundamentally changed in decades, but would you say computing hasn't quickly changed? Alternatively, we can bombard lead with protons to make gold, or generate net energy via fusion reactions, but alchemy nor fusion are currently economically impactful on the global market, except maybe as a line item for research. People underestimate the importance of efficiency and economics when looking at things in a purely technological perspective.
- BlueTemplar 6y agoI see your point, but that's not what I mean by 'no profit' in that specific case. I mean in comparison with traditional oil drilling, which is (was) a filthy rich industry.
- leereeves 6y agoTight oil can't be profitable while OPEC has significant conventional oil extraction, because when US tight oil extraction is profitable, OPEC produces more to lower the price. But its existence prevents OPEC from strangling the US economy too much, until we can transition to other energy sources.