Everything hunky-dory in Trumpland now that the impeachment charade is almost over? Look at this chart from
WolfStreet.com:
The shale oil patch is hurting because a barrel of WTI is at $56. Fracking is expensive extraction, and production companies need higher prices to make a profit. The total debt involved in these bankruptcies since 2015 is $207 billion. Predictably banks, with the best collateral took the smallest losses, secured bondholders next, bondholders next, then equity owners the most. The bust started in 2016 when WTI dropped from $100 a barrel to below $30. Historically the oil 'bidness' has been boom or bust as production chases prices, gluts the market, and then drops in response to lower prices. Similar price action is seen in the natural gas market. The current price o $1.90/mBtu is well below everybody's break even.
Bankruptcies occur when E&P companies can no longer obtain financing to service their perennial negative cash flows or debt burden. When these companies cut back on drilling the knock-on effect is then felt by distribution companies (pipelines) and oil field service companies. As soon as priice go up again, investors looking for yield wil pour money back into the sector and its boom times again. It's just how finance capitalism works.
