The tight oil revolution is brought on by cheap debt and leverage. Should it unravel one day, then it would not be surprising that the first domino to fall will likely be from the capital markets.
In a what-if analysis, Deutsche Bank calculates the price threshold of oil below which would not only cause catastrophic events in the high yield bond market where tight oil companies raise their capital, but also send a shock wave across the entire high yield bond segment.
The slump in oil prices is especially problematic for the tight oil industry which is dependent on cheap debt. Oil prices hovering around $80, if sustained, do not bode well with future supply of the liquid fuels.
Thanks to the stunning drop in the cost and energy input required in its manufacturing process, the energy payback times of solar PV systems have shrunk so dramatically that mass adoption of this renewable energy source is at hand.
Our society, the complexity of which is built upon a large surplus of net energy, will experience the effects of the energy curve and potentially even the energy cliff as the quality of our energy sources continues to degrade.
Squeezed between the rapidly rising cost of oil production and our society’s inability to digest high oil prices, the dynamics of the oil depletion spiral will be delivering increasingly frequent bouts of pain to our oil dependent economies.
See how the phenomenon of the drilling treadmill is playing out in the two biggest tight oil fields in the US.
How does the claim of oil abundance and energy independence brought on by tight oil in the U.S. measure up against reality? What is the impact of tight oil in the context of global crude oil production and consumption?
How does the claim of 100-years of natural gas abundance touted by the shale oil and gas industry measure up against reality? What are the reasons the industry is maintaining this narrative?
Regardless of which side you are on in the peak oil and climate change debates, it is important that you are equipped with a good understanding of the fundamental factors driving the supply and demand of crude oil which is arguably the most important e …