There’s More to the Oil Collapse Than Just Shale

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Bloomberg provides us today with the following chart of oil prices over the years:

James Pethokoukis has a complaint:

There is one major factor affecting oil prices that somehow got left out. Really, nothing on fracking and the shale oil revolution? Granted, it’s not an event easy to exactly date (though somehow the accompanying article manages the trick), but neither is China’s economic takeoff, and that got a shout-out.

It’s a fair point—but only up to a point. Keep in mind that US shale oil production has been growing steadily for the past five years, and during most of that time oil prices have been going up. It’s only in the past six months that oil prices have collapsed. Obviously there’s more going on than just shale.

James Hamilton, who knows as much about the energy market as anyone, figures that about 40 percent of the recent oil crash is due to reduced demand—probably as a result of global economic weakness. Of the remainder, a good guess is that half is due to shale oil and half is due to the OPEC price war in Bloomberg’s chart.

In other words, although US shale oil production is likely to have a moderate long-term impact, it’s probably responsible for a little less than a third of the current slump in oil prices. The rest is up to OPEC and a weak economy. So give shale its due, but don’t overhype it. It’s still responsible for only about 5 percent of global production.

LET’S TALK ABOUT OPTIMISM FOR A CHANGE

Democracy and journalism are in crisis mode—and have been for a while. So how about doing something different?

Mother Jones did. We just merged with the Center for Investigative Reporting, bringing the radio show Reveal, the documentary film team CIR Studios, and Mother Jones together as one bigger, bolder investigative journalism nonprofit.

And this is the first time we’re asking you to support the new organization we’re building. In “Less Dreading, More Doing,” we lay it all out for you: why we merged, how we’re stronger together, why we’re optimistic about the work ahead, and why we need to raise the First $500,000 in online donations by June 22.

It won’t be easy. There are many exciting new things to share with you, but spoiler: Wiggle room in our budget is not among them. We can’t afford missing these goals. We need this to be a big one. Falling flat would be utterly devastating right now.

A First $500,000 donation of $500, $50, or $5 would mean the world to us—a signal that you believe in the power of independent investigative reporting like we do. And whether you can pitch in or not, we have a free Strengthen Journalism sticker for you so you can help us spread the word and make the most of this huge moment.

payment methods

LET’S TALK ABOUT OPTIMISM FOR A CHANGE

Democracy and journalism are in crisis mode—and have been for a while. So how about doing something different?

Mother Jones did. We just merged with the Center for Investigative Reporting, bringing the radio show Reveal, the documentary film team CIR Studios, and Mother Jones together as one bigger, bolder investigative journalism nonprofit.

And this is the first time we’re asking you to support the new organization we’re building. In “Less Dreading, More Doing,” we lay it all out for you: why we merged, how we’re stronger together, why we’re optimistic about the work ahead, and why we need to raise the First $500,000 in online donations by June 22.

It won’t be easy. There are many exciting new things to share with you, but spoiler: Wiggle room in our budget is not among them. We can’t afford missing these goals. We need this to be a big one. Falling flat would be utterly devastating right now.

A First $500,000 donation of $500, $50, or $5 would mean the world to us—a signal that you believe in the power of independent investigative reporting like we do. And whether you can pitch in or not, we have a free Strengthen Journalism sticker for you so you can help us spread the word and make the most of this huge moment.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate