Last I checked, West Texas Intermediate was hovering just over twenty bucks a barrel. There's not a fracking outfit in America that can stay solvent at that price.
It's fracking and nothing else that's turned the US into the world's number one oil producer. America is almost unique in its dependence on fracking, which is banned practically anywhere that public opinion is factored into the decision-making process.
There's a reason for that. Approval of fracking projects requires a conscious decision to prioritise short-term financial returns over a long-term safe water supply. In a reasonably well-functioning democracy, that obviously won't happen.
The COVID-19/coronavirus scare has been headline news since January. When did mayhem descend on global markets? A week ago Monday, the first trading day after news came out that OPEC+ had failed to reach an agreement on output restrictions.
So supply goes up just as demand is slipping. Any Economics 101 student can tell you what's gonna happen next. And here we are.
The exposure of the US financial sector to the fracking industry runs into the hundreds of billions. If the US government came to the people and asked for massive assistance for the frackers and their lenders, there'd be rioting in the streets.
However, if the US government tells you to isolate yourself and we're trying to save you from this dastardly pandemic by wildly spraying free money all over the place, folks go along with it.
The problem is this; they can spray around free money all they want, but if, when they're done, oil remains at $20, the economy is screwed anyway.
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