Monday Smackdown: Stupidest Man Alive Donald Luskin Retains His Crown!
I know I promised only one Smackdown a week—or, at least, only one non-DeLong Smackdown a week. But...
I put this in the tickler file three years ago, to see whether OPEC could raise prices and oil would go to $30 a barrel and whether lower oil prices would in fact trigger an oil patch and global superzoom, as "there will be no limits to growth in the global economy in a few years when... oil... becomes, for all practical purposes, free... the lower oil prices go, the more money the frackers can make...". Look today, and what do we see: 75 dollars a barrel. Not: 30. Nor: "for all practical purposes, free":
And the promised oil patch superboom—"the lower oil prices go, the more money the frackers can make..."? Employment in Oklahoma City relative to the nation as a whole:
(2015): The Shale Boom Shifts Into Higher Gear: "The question is whether U.S. frackers can adapt to the lower prices they created...
...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... to dash headlong down the learning curve, crushing costs and prices and making up for it in volume.... The conventional wisdom is that fracking is... less amenable to the economies of scale exploited by traditional methods. But for today’s shale operators, that’s a feature, not a bug.... Wells in light tight-oil formations can be drilled and completed for millions--not billions—of dollars.... OPEC... can’t raise prices.... The American fracker is the man at the margin now. And as his productivity continues to improve, that margin moves lower and lower.... There will be no limits to growth in the global economy in a few years when... oil... becomes, for all practical purposes, free. And the lower oil prices go, the more money the frackers can make...
