The fracking industry has invented their own style of book keeping. You don’t hear them mention the word ‘profit’ much at all, probably because any redefinition that would suit their needs, would make them a laughing stock. Luckily they can pretty much do without that word, because they’re not likely going to make any of it. The tiny little insignificant aspect they prefer to obfuscate is their venture capital debt, which is thought to be $250 billion — a sum so large it is inconceivable that they might ever make enough from fracking to pay it back. And that’s to say nothing about the environmental damage, which would bankrupt them in a heartbeat if they were ever held accountable,
What a monumental waste! All of it to develop and implement the most destructive mining technique the world has seen. A $billion would put grid-tie solar systems on more than 50,000 homes. Oh well, I guess milky-brown tap water that can be lit on fire has entertainment value.
The fracking industry could be significantly impacted if the price of oil stays low. A number of analysts, who choose to view the fracking industry’s finances the way most other business do: objectively, consider fracking to be a ponzi scheme, billions upon billions of venture capital dollars have been invested. It’s inconceivable that fracking will produce enough to recoup these investments. The fracking industry’s idea of success is a site with revenue in excess of operating costs (which is nothing even near profitability, of course.)
Servicing debt is part of that operating cost. At $80 or more per barrel it was do-able for the frackers, but fracking is labor intensive, and one barrel of oil is consumed for every two barrels produced by fracking. At current prices frackers can’t even pretend to operate in the black. If any fracking outfits are driven into bankruptcy by the price war, there will be no way around figuring out how much investors lost. Theoretically such revelations will expose the entire industry as a ponzi. What would happen after that is anybody’s guess — hopefully the swift and complete demise of fracking.
Russia is competing with OPEC on the international market. When the Saudis lower their price, other sellers must either follow suit or lose their buyers to the Saudis. The Saudis have a huge cash reserve, they could hold this price for years. Russia and Iran rely on their oil income to stay solvent, a lower price means less income (the amount of oil they produce and sell remains relatively static.) Of course, the US is also an oil producer, this price war has left corporate casualties here too, but we aren’t as reliant on exports.