June 1, 2015
Quote of the Day
Man, do I miss Larry Kudlow's show. Used to see Don Luskin about once a week.
Now the question is whether U.S. frackers can adapt to the lower prices they created. Fracking blossomed following the trough of the Great Recession, when oil prices were, on average and adjusted for inflation, the highest in history--even higher than in the 1970s. It was an ideal price environment for entrepreneurs to perform some very expensive experiments, ultimately learning how to drill holes two miles under a frozen prairie, turn the wellbore 90 degrees, drill out another mile or two, then hydraulically force a designer cocktail of water, sand and secret sauce down the hole to liberate petroleum molecules trapped since dinosaurs strode the earth. -- Don Luskin and Michael Warren
UPDATE: I stopped excerpting too soon:
The nimblest and smartest competitors have worked relentlessly to increase their productivity. Leading-edge operators report that they can produce more profitably today at a price of $65 a barrel than they could at $95 a barrel three years ago. Where can they be profitable three years hence--$40 a barrel? $30? The oil patch today is afire with the same technological imperative and competitive mission that has powered the U.S. electronics revolution--think Moore's Law--to dash headlong down the learning curve, crushing costs and prices and making up for it in volume.Quote of the Day Posted by John Kranz at June 1, 2015 12:18 PM