Oil war threatens American fracking industry - Entrepreneur Generations

The already unstable American hydraulic fracturing industry is under threat because of a coronavirus-fueled game of chicken between Russia and Saudi Arabia.

Demand for energy is falling worldwide as people cut back on travel and production in the wake of the coronavirus epidemic. Too much supply and not enough demand for oil lowered prices. Over the weekend, Saudi Arabia urged other members of the Organization of the Petroleum Exporting Countries to cut production in order to boost prices, but Russia refused. Because of the coronavirus and Russia's refusal, oil prices have dropped as much as 30 percent in the last week, The Associated Press reports.

"Now the fracking industry, which President Donald Trump sought to expand with hard-line support for increased fossil fuel production, faces potential ruin," Alexander Kaufman reports for HuffPost. "Fracking, a ballyhooed but financially fragile sector, struggled to stay afloat with crude selling at $50 per barrel. If prices stay around $30, or even fall as low as $20, U.S. frackers simply might be unable to keep up."

Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis, called the situation a "financial bloodbath" and told Kaufman, "With oil prices at the current level, there’s a real risk many of them will simply go bankrupt."

Fracking makes up 63% of U.S. oil production, according to estimates from the Energy Information Administration. Oil and gas drilling is growing faster in the U.S. than in any other country, and fracking accounts for 90% of that growth, Kaufman reports.

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