Investing in Peak Fracking

Written By Jeff Siegel

Posted May 6, 2016

peakfrackingWhen it comes to oil, I’m not an expert.

I understand the underlying fundamentals of how the oil industry works. I get the connection between cheap oil and economic growth, and I’m certainly tuned in to the uncomfortable reality that without a steady supply of crude, the world comes to a screeching halt.

So when I sing the praises of alternative transportation technologies, such as electric vehicles and high-speed rail the hyperloop, it’s not just for the environmental benefits. It’s for the economic and security benefits, too.

Thus, when new analysis reveals new inconvenient truths about our reliance on oil, I’m quick to share. And that’s why I’m writing this today.

Earlier this week, analyst Bill James posted a piece on Seeking Alpha called, “Peak Fracking, Perpetually Higher Oil Prices.” It’s a solid piece that details some revealing data indicating we may have reached “peak fracking,” back in 2015.

  • Peak Fracking occurred in June 2015 with production falling 672,000 barrels per day; by March 2017 decrease will exceed the 1973 Oil Embargo.
  • Rig counts dropped from 1840 in December 2014 to 420 in April 2016.
  • Fracking wells deplete quickly. Without 1840 active drilling rigs, fracking production will deplete quickly.
  • Fracking companies are $200 billion in debt. Without capital, replacement wells seem unlikely.

For complete details, you can read James’ full analysis here.

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