Fracking is an amazing technology helping US produce large amounts of crude oil

Dennis Gartman Blog and News Dennis Gartman on the Fracking industry

Fracking gets a bad name. It has changed. Ten or Fifteen years ago, wildcatters were lucky if 50% of their drilling hit crude oil. Now it’s 95%. It’s astonishing. Now, instead of a rig sending down one pipe to look for crude oil, it sends down that pipe and then bends it into 16 different directions for miles. It’s called horizontal drilling. We are sucking crude oil out of the fingertips of reserves in the ground that 10 years ago we couldn’t get to. It’s just amazing what’s going on.

Look at the number of drilling rigs on the Pennsylvania-New York border. New York does not allow you to drill for crude oil or natural gas, even though it has one of the biggest reserves in the U.S., the Marcellus shale. It’s a rock formation that’s frackable. There are hundreds of drilling rigs on the Pennsylvania-New York border. Each one of them says they are not drilling into New York. Bull. Of course they are.

Pay attention to crude oil prices. The United States is now the largest producer of crude oil in the world, surpassing the Russians and the Saudi Arabians last year. The probability of crude oil rallying much beyond $60 a barrel is slim. It could fall from those levels. The cost of running your machinery is not going to go higher, and it could go lower.

Until four years ago, driving miles in the U.S. went up at a consistent pace since 1947. Now the trend line is falling. There is no question people are driving less. It’s Uber and Amazon and Netflix. People are staying home. It is an amazing phenomenon that is not going to change. Fuel prices probably are not going to get any higher.

via SuccessfulFarming