Why Does America's Oil Output Refuse to Collapse?

Many predicted the collapse in oil prices would bankrupt the frackers. It hasn't.

by Rod D. Martin
October 21, 2015

U.S. oil output isn't dropping. And that is...more than a little interesting.

Given the collapse in oil prices -- very recently we were told that $250 oil would be the new normal -- many predicted that U.S. frackers would be run out of business. That was certainly Saudi Arabia's intent when it opened oil's floodgates last year. The operative theory was that the frackers' higher production costs would bankrupt them at $50 a barrel.

But it didn't, even as prices dropped 50 percent, 25 percent of that just in the last quarter. And then we began to hear that the number might be $40. And then $30. Some are now saying $20.

U.S. rig count is indeed down by more than half. To that degree, the Saudi's bet payed off. And yet, U.S. oil output is within 3 percent of its 40-year high, and a report out two weeks ago shows that U.S. production actually rose 1 percent in July to an incredible 9.4 million barrels a day. A more pessimistic writer frets that that OPEC is "cr…