It is the F-word that dares not speak its name at the Washington Post. At least not in the WonkBlog story about plunging oil prices by Chris Mooney. That word is “fracking.”
Mooney is notorious for his antipathy towards fracking but his failure to attribute the large increase in U.S. oil production to it is laughable. Here is Mooney noticing that oil prices are going way down but fails to credit it to you-know-what due to his ideology:
Oil prices continued their slump even lower today, with West Texas Intermediate crude — a U.S. benchmark — now well below $60 per barrel. This is part of a momentous decline of over $40 per barrel since late June.
One catalyst today is the International Energy Agency’s release of its latest Oil Market Report, which lowered the agency’s forecast for global oil demand growth in 2015 by 230,000 barrels per day. This means that demand in 2015 is only expected to exceed demand this year by .9 million barrels per day, a sluggish 1 percent rate of growth.
Okay, a small decrease in expected demand is one reason for the oil price drop but what is the main reason?
The IEA also goes into great depth about which countries are creating these imbalances. Demand in Europe, Japan, and China is slack or less than expected — even as production in the United States is way up, and the OPEC nations are keeping production steady.
Ah! So oil production in the U.S. is way up after years of the public being propagandized by the “peak oil” shtick. So WHY is oil production now way up leading to the big price decrease? Why? Hello Chris? Can you tell us why or is it that you don’t want to?
Well, Mooney is too embarrassed to write the F-word but the readers of his story have pointed out this very notable absence:
There are several reasons why we are reaching a breaking point for low oil prices.
One is the ”floor” under oil’s previous lows is a line from the $18 after 9-11-01 to $40 here today.
But another is the so-called break-even point as to what a driller needs to get for each barrel.
The Libyians have been in trouble for a while because their BE point is $317/barrel.
Russia is stressed because theirs is $105/barrel.
But go to the ME and they are also in some trouble:
Saudi Arabia: $98
Only Bakken has not been hurt yet.
Its fracking only costs it $40/barrel.
The Saudis admit being behind these low prices as they are trying to freeze out this new competition.
How’s that working out for them?