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Why Cheap Oil is Great News by Erica Schultz
Hydraulic fracturing, known as fracking, uses horizontal drills and pressurised water to extract formerly unobtainable oil and gas from within rocks. The technology, which in its modern form is less than 20 years old, will, in spite of the naysayers and scaremongers, save us all a fortune.
From $110 a barrel in 2014 to just $40 today, the fall in the cost of oil is wonderful news. Now you may, of course, have heard otherwise from the media’s merchants of doom with their predictions of bankruptcies, eco-turmoil and political chaos, but that’s because they’re the oil barons’ sock-puppets who spout what their masters tell them to. Sure, there are a handful of teary-eyed despots and Wall Street suits for whom this last year hasn’t been too pleasant, but for the other 6.4 billion of us, the 60% fall in price represents a $3 trillion bumper bonanza.
The enormity of this windfall is due to the fact that oil is literally and metaphorically the lubricant of the industrialised world. Its annual value exceeds that of the next eight
commodities combined, and from fertilisers to food to fuel, oil is part of everything we eat, drive and use.
Now, I will hold my hands up and admit that this situation is not a wholly unalloyed good. Yes, the global economy is weak and, therefore, demand for oil is lower because of it; and yes, some producers may close down because it’s uneconomical for them to pump at current prices. But lower costs of living for the many trump any pain incurred by the few, both in simple value terms and in the fact that the benefits to the poor from cheaper prices far outweigh any harm done to the mega corporations and the one-percenters.
And the reason behind all of this is fracking. For 40 straight years from 1970, American oil production was in a steady, and many felt permanent, state of decline. Then came fracking – first for gas and then for oil. The twin keys to this revolution are that not only does the technology allow much more oil to be gained from new wells, but it also lets developers go back to older, disused shafts and re-drill them, boosting production
without the costs and risks associated with new exploration. The result has been a turbocharging of the U.S. oil sector, the output of which has helped the nation recapture the title of world’s biggest producer.
Don’t think this is a temporary situation or even uniquely American, though. The technology can and will only get better, and it can and will be used everywhere else there’s black gold still awaiting extraction. Moreover, certain countries’ attempts to flood the market with oil in order to force the global price down and thereby bankrupt the infant fracking industry has backfired badly, harming those behind the scam more than anyone else.
So make no mistake: fracking is here to stay, and we should thank our lucky stars for it and the bounty it brings us. Without oil, you and I and everyone else on Earth would be leading lives nastier, shorter and more brutish than those we enjoy at present. So instead of shedding a tear for the petro-dictators and the eco-weenies we should all raise a glass to the frackers, as it's thanks to their efforts we’re now enjoying our oil at the knockdown price of 35c per litre. Cheers!
