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| courtesy: James Quinn@marketoracle.co.uk |
The Wall Street shills would have you believe that Bakken crude can be produced profitably even at this low, low price. Don't believe them. How will small producers pay-off their junk bond debt when every barrel costs them as much as $40 more than the sale price? A rhetorical question that has an obvious answer: they can't. Shale and tar sand oil was not previously exploited for two major reasons: one, the technologies were not yet available and the costs of production were too high. In 2012 a barrel of oil was selling at over $100. Production costs are still significantly higher than producing lighter crude using conventional drilling methods. So, layoffs have started in the Canadian tar sands patch. Alberta, the Saudi Arabia of tar sands, has lost about 13,000 jobs since September of last year. Globally, energy sector job losses exceed 100,000 Boom times have turned to bust one more time.