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Assuming there are FR people who do not know particulars about shale, here are a few.

1) It’s not infinite. If oil were infinite all of North Dakota would be drilled. It’s not. Only the northwest corner is the Bakken, and it’s been drilled and fracked for over 10 yrs now.

2) The day an oil well starts producing oil is the day it begins to die. In Saudi Arabia, they have wells still flowing in Ghawar that started flowing in 1960. Saudi Arabia is not shale oil. It is far superior.

3) There are two qualities of rock that matter in oil. Porosity and permeability. Porosity is the pores in rock, that fill with a mix of oil and water. Permeability is the interconnectedness of pores. Shale by its nature has horribly low permeability. If you drill a well, you get the flow from pores you drill through and from not much distance around that well, because low interconnectedness.

4) Fracking is artificial permeability. It fractures the rock, pumps proppant into the cracks to hole them open when the pump pressure above is withdrawn, and thus, flow can happen from distances considerably away from the well.

5) This has been going on for over a decade now. A shale/fracked well flows X barrels/day on day 1, and on day 365 that flow rate is down 50%. The saying is fracked wells are drilled horizontally and they die vertically. The rate of decline is profound. A typical well will last only a handful of years, in contrast to the decades from Saudi Arabia. Critical truth: The best areas are drilled/fracked first.

6) This fracking technology was pioneered by the Russians in the 1980s. It’s not rocket science. The big shale/fracking boom came from loaned printed money the Fed created starting 2009 to avoid death of civilization from the Mortgage Backed Securities disaster. Thus most shale operations lose money, but because the loans have not been foreclosed, and CEOs were paid bonus determined by production (not profit), wells were drilled frantically to overcome that vertical output decline on the graph.

Moral of the story, time has passed, the formation doesn’t have infinite oil, so don’t think failure to increase production is all that voluntary.

[Moral of the story, time has passed, the formation doesn’t have infinite oil, so don’t think failure to increase production is all that voluntary.]

It’s voluntary in the sense that more exploration could be going on at a much faster pace. The problem, again, is that a regulatory regime aimed at zeroing out fossil fuel shareholders doesn’t provide much incentive for oil company execs to risk it all unless the government guarantees floor prices and minimum volumes.

IIRC, $500b was lost from peak to trough in the last bust, during which spot oil went negative. Bond and equity holders were bled white and numerous companies simply folded. To put things in perspective, BP’s market cap today is 1/2 what it was at its peak 12 years ago. Meanwhile, the S&P 500 is 4x what it was. Another way to put this? If you invested $1,000 in the S&P 500 then, you have $4,000 today. Whereas a $1,000 in BP then would have you looking at $500 today, for a $500 loss. The idea that oil companies are raking in the cash is risible. All they’re doing is repairing the damage to their balance sheets from a hostile regulatory environment, whether kleptocratic foreign governments and pressure groups or relentlessly predatory domestic regulators and lawmakers.