Nick Hodge – Peak Oil: It’s Baaaack
Over the past few months, I’ve been sharing my concerns about shale oil.
Namely, that it’s more comparable to a Ponzi scheme than any sort of boom.
I’ve articulated the reasons for my thesis, including fast decline rates, the amount of new rigs and wells needed, and a cost of production that’s been higher than the price of sale for some time now.
I’ve also shared recent evidence that this theory is proving correct, from horrid earnings reports — citing the reasons I just mentioned — for oil majors across the board to the fact that mainstream media outlets are starting to put the dots together, running stories like:
“Big Oil Companies Struggle to Justify Soaring Project Costs” —Wall Street Journal
“Dream of U.S. Oil Independence Slams Against Shale Costs” — Bloomberg
“Why America’s Shale Boom Could End Sooner Than You Think” —Forbes
“What Happens When The Shale Boom Ends?” — Christian Science Monitor
After my last article on the subject, I got an email from a sophisticated investor-friend of mine worth hundreds of millions of dollars — some even say a billion. His subject line was: “Awesome Article on Shale.” Here’s what he had to say: