Is Fracking Industry Too Wounded to Respond as Oil Prices Bottom Out?
Eventually what goes down, must come up. And to the relief of everyone in the oil industry, the global energy watchdog, the International Energy Agency (IEA) believes that there are signs that oil prices “might have bottomed out.”
The IEA goes onto hope that “there may be light at the end of what has been a long, dark tunnel,” before warning that “we cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance.”
The oil price is certainly showing signs of recovery. Indeed, in its latest monthly report, the IEA notes that oil prices have risen by a whopping forty percent since early February.
But as the OilPrice website notes, much of this rise has nothing to do with the fundamentals of the oil market—supply and demand—it is due to the fact that speculators believe the price could go no further down.
As they say: “Much of the rally has a lot more to do with market sentiment than with the fundamentals. Oil speculators have closed out a huge chunk of their short positions, making bets that oil prices had reached a bottom. The short-covering rally contributed to a sharp jump in prices.”
“We’ve got the bottom in for oil,” argues influential trader Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which runs a portfolio of $3.4 billion. “Gasoline demand is improving and we have a strong speculative participation in the market. You are building a base for oil to trade between $30 to $50.”
Whether this recent rise is actually good for the oil industry is open to debate. Some analysts believe that the rise could become “self-defeating” as it will allow some American shale producers to ramp up production, after moth-balling certain operations due to the price plunge.
One such analyst Jeffrey Currie, the head of commodities research at Goldman Sachs, argues “My concern is if the market surges right back to $50 a barrel … we just end up with another problem six months from now.”
But whether the U.S. shale industry can just crank up production and act as what is known as a “swing producer,” is now open to debate.
Restarting production overnight is just not going to happen. The shale industry may have cut itself too close to the bone to be able to start running again.
The industry has shed more than 100,000 jobs in the last year and these cannot be replaced at a click of the fingers. Some 60 percent of fracking equipment is idle or offsite.
Alex Beeker, a Wood Mackenzie analyst says simply: a recovery “doesn’t happen overnight.”
Others agree. According to today’s Wall Street Journal “As oil prices show some signs of stabilizing, American producers and oilfield-services companies are warning that they may not be able to jump-start drilling.”
The Wall Street Journal argues that the reason for this is that “many independent companies are too financially strapped, have let go too many workers or have idled too much equipment to immediately ramp up again.”
John Hess, the chief executive of Hess Corporation tells the paper: “The balance sheets of these shale-only producers have to be repaired for them to get back to drilling. That’s going to curb any recovery.”
Others are equally cautious. Lynn Helms, director of North Dakota’s Department of Mineral Resources is quoted as saying, “If you’ve been on a strict diet for a long period of time, it takes a while to put the weight back on.”
Indeed, the boss of one fracking company, Basic Energy Services, which has laid off more than 40 percent of its workforce, told a conference last week: “We have lost a lot of good people. They won’t be back.”
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This week marks the official start of fall, but longer nights and colder days can make it harder to spend time outdoors. Luckily, there are several inspiring environmental films that can be streamed at home.
1. Kiss the Ground<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="ccc5f0c92a5603e68aec39e56b0db02a"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/K3-V1j-zMZw?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: Netflix</strong></p><p><strong>Premiere Date: Sept. 22</strong></p><p>Between <a href="https://www.ecowatch.com/wildfires-california-washington-oregon-photos-2647585008.html" target="_self">wildfires devastating the U.S. West Coast</a> and <a href="https://www.ecowatch.com/tropical-storm-beta-landfall-2647760268.html" target="_self">storms battering the Gulf</a>, the impacts of the <a href="https://www.ecowatch.com/climate-change/" target="_self">climate crisis</a> can feel overwhelming right now. <em><a href="https://kissthegroundmovie.com/" rel="noopener noreferrer" target="_blank">Kiss the Ground</a> </em>offers an alternative to all of the bad news by focusing on solutions.</p><p>The film, directed by Josh and Rebecca Tickell and narrated by Woody Harrelson, explains how we can heal the Earth through "regenerative agriculture," farming practices that draw carbon dioxide from the atmosphere and into soil as a way to restore soil health, which in turn boosts ecosystems and food supplies.</p><p>"<em>Kiss the Ground </em>shows how feasible it is to make these changes at a grassroots level immediately and make a truly substantive impact with low cost and easy to implement solutions," Executive Producer RJ Jain said in an email. "This is why I got involved."</p>
2. Public Trust: The Fight for America's Public Lands<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="5338f7a2931e356910026e5fd76fac56"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/jsKMTAaj_wQ?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: YouTube</strong></p><p><strong>Premiere Date: Sept. 25, 2 p.m. EDT </strong></p><p>This <a href="https://www.patagonia.com/films/public-trust/" target="_blank">award-winning documentary</a> tells the stories of Indigenous activists, journalists, whistleblowers and historians working to protect America's <a href="https://www.ecowatch.com/tag/public-lands" target="_self">public lands</a>. The film focuses on three political struggles: the shrinking of <a href="https://www.ecowatch.com/tag/bears-ears" target="_self">Bears Ears</a> National Monument in Utah, the mining of Boundary Waters Wilderness in Minnesota and the opening of the <a href="https://www.ecowatch.com/tag/Arctic-National-Wildlife-Refuge" target="_self">Arctic National Wildlife Refuge</a> to fossil fuel exploration.</p><p><em>Public Trust</em> was directed by David Garrett Byars and produced by Jeremy Rubingh. Patagonia Films, Patagonia founder Yvon Chouinard and actor Robert Redford are executive producers. It will be <a href="https://www.youtube.com/watch?v=OGjnIG7puzY" rel="noopener noreferrer" target="_blank">released</a> on YouTube in time for <a href="https://www.ecowatch.com/national-public-lands-day-2640656776.html" target="_self">National Public Lands Day</a>.</p><p>"Our country is fortunate to have millions of acres of public lands, including National Parks, Monuments, Wildlife Refuges and Wilderness set aside for future generations," Redford said. "Sadly, these lands that belong to you and me are under unprecedented threats from the greed of big corporations, eager to weaken restrictions in the pursuit of profits. Many of our current politicians are also to blame. <em>Public Trust</em> tells the story of citizens who are fighting back. It's a much-needed wake-up call for all of us who want to preserve our unique and wild cultural heritage."</p>
3. David Attenborough: A Life on Our Planet<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="156438a30836a765d7a92982545fc334"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/B_OFZvAd05Y?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: Netflix</strong></p><p><strong>Premiere Date: Oct. 4</strong></p><p>Beloved nature broadcaster <a href="https://www.ecowatch.com/tag/David-Attenborough" target="_self">David Attenborough</a> has spent his career introducing viewers to the wonders of our planet. In recent years, his footage of albatrosses swallowing <a href="https://www.ecowatch.com/tag/plastics" target="_self">plastic</a> in <em>Blue Planet II</em> has been credited with <a href="https://www.ecowatch.com/2018-fighting-plastic-waste-2624606566.html" target="_self">helping to ramp up</a> the global fight against plastic pollution. Now, in this <a href="https://www.wwf.org.uk/" rel="noopener noreferrer" target="_blank">World Wildlife Fund</a> (WWF)-produced <a href="https://www.attenborough.film/" rel="noopener noreferrer" target="_blank">documentary</a>, he reflects on the defining moments of his career and the devastating changes he has witnessed.</p><p><em>David Attenborough: A Life on Our Planet,</em> which was also produced by Silverback Films and directed by Alastair Fothergill, Jonnie Hughes and Keith Scholey, features an intimate conversation between Attenborough and Sir Michael Palin as the broadcaster reflects on his life and a career that took him to every continent on Earth. In addition to streaming on Netflix, the movie will be available in select theaters starting Sept. 28.</p><p>"For decades, David has brought the natural world to the homes of audiences worldwide, but there has never been a more significant moment for him to share his own story and reflections," WWF executive producer Colin Butfield said in a <a href="https://www.wwf.org.uk/updates/david-attenborough-life-our-planet" target="_blank">statement</a>. "This film coincides with a monumental year for environmental action as world leaders make critical decisions on nature and climate. It sends a powerful message from the most inspiring and celebrated naturalist of our time."</p>
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