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Report: Without The Fracking Boom, Oil Would Be At $150 Per Barrel

By Michael Bastasch

The price of oil fell from about $100 per barrel to $80 per barrel in a matter of months, bringing with it lower gasoline prices for drivers and a modest boost to the economy ahead of the holiday season.

This is all thanks to the advent of hydraulic fracturing, or fracking, and horizontal drilling in the U.S., without which gasoline prices would be nearly one dollar higher and oil would cost as much as $150 a barrel, according to a recent report.

Energy experts at ICF International estimate that “international Brent crude oil prices would have averaged $122 to $150 per barrel in 2013” without the massive increases in oil production from fracking. Instead, oil prices have fallen to around $80 per barrel and are projected to fall even further — maybe even to $60 per barrel.

“Given the international nature of U.S. petroleum product movements, ICF also estimates that 2013 U.S. petroleum product prices were between $0.29 and $0.94 per gallon lower than they would have otherwise been without” fracking, ICF reports.

“This reduction in petroleum product prices have saved U.S. consumers an estimated $63 to $248 billion in 2013 and estimated cumulative savings of between $165 and $624 billion from 2008 to 2013,” ICF notes in its report that was prepared for the American Petroleum Institute — the country’s main oil and gas lobbying group.

Fracking is a well-stimulation process in which water, sand and some chemicals are injected into shale formations deep underground to extract oil and natural gas. This practice, combined with horizontal drilling has revolutionized the U.S. oil and gas industry and put the country on the path to be the world’s largest oil and gas producer.

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Article Source: Bastasch, M. (2014). Report: Without The Fracking Boom, Oil Would Be At $150 Per Barrel. Retrieved from

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Stocks Mostly Lower as Oil Sinks, Europe Struggles

By Matthew Craft

Energy companies led U.S. stocks lower Monday as the price of oil languished around $80 a barrel and more disappointing economic news came out of Europe.

Goldman Sachs lowered its outlook for crude prices and a report on business confidence in Germany, Europe’s largest economy, showed a sixth straight month of declines.

KEEPING SCORE: The Standard & Poor’s 500 index slipped five points, or 0.2 percent, to 1,960, as of 12:15 p.m. on Monday. The Nasdaq composite sank seven points, or 0.2 percent, to 4,476, while the Dow Jones industrial average dipped nine points, or 0.1 percent, to 16,794.

OIL SLIPPING: Mounting evidence of rising supplies and weak demand continued to weigh on the price of crude oil, which has dropped from a high of nearly $107 a barrel in June. Goldman Sachs was the latest Wall Street bank to lower its forecast for prices in a report out Sunday, saying OPEC was unlikely to cut exports to try and push prices back up. Benchmark U.S. crude was down 79 cents to $80.24 in New York trading. Brent crude, used by many U.S. refineries to set prices, was down $1.20 to $84.93 in London.

OIL STOCKS: The slide in crude tugged down the stocks of oil and gas producers and the companies that provide services for the industry. Exxon Mobil and Chevron fell 1 percent, and Halliburton’s 7 percent drop was the worst in the S&P 500.

MERCK STRUGGLES: A large group of U.S. companies are reporting results this week. Merck on Monday said its earnings fell in the third quarter as pharmaceutical sales sank 4 percent. The drug company also scaled back its most optimistic forecasts for full-year profits and sales. The news knocked Merck’s stock down $1.40, or 2 percent, to $56.20.

NOT SO BAD: Last week, the stock market turned in its best performance in nearly two years. That helped the S&P 500 recover from a four-week slump. The benchmark index had lost almost 6 percent by mid-October, but is now down 0.6 percent for the month.

CHOPPY TRADING: What’s behind the recent turbulence? David Joy, chief market strategist at Ameriprise Financial, thinks it’s tied to actions by the world’s central banks. The Federal Reserve is winding down its $4 trillion bond-buying program — known as QE — this month. And many investors expect the European Central Bank to launch its own program on a similar scale.

“We’re approaching the end of QE, and I think the market is going through a period when people are asking how important is it to lack that support,” Joy said. “The open question is how robust is the economy you’re left with. Is it strong enough to sustain earnings growth?”

STRESSFUL TESTS: The European Central Bank said that 13 of Europe’s 130 biggest banks failed a review of their finances and need an extra 10 billion euros ($12.5 billion) to strengthen themselves. The bank that did worst in the tests, Italy’s Monte dei Paschi di Siena, saw its shares plunge 18 percent. Those that passed, however, traded higher.

QUOTE: “The stress tests showed healthy balance sheets in most major institutions while those found with capital gaps are mostly contained in periphery nations,” said Desmond Chua, of CMC Markets, in a commentary.

GERMAN DATA: European stock markets swung lower later in the day when Germany’s Ifo index of business confidence showed a fall for the sixth consecutive month in October, the latest in a string of disappointing data. Some analysts suggested lower oil prices and a weaker euro should help industrial companies and exporters and keep the country from falling into a recession.

EUROPE’S MARKETS: Germany’s DAX lost 0.9 percent, while France’s CAC 40 dropped 0.7 percent. Britain’s FTSE 100 dipped 0.4 percent.

CURRENCIES: The euro rose to $1.2677 from $1.2670 late Friday. The dollar fell to 107.86 yen from 108.16 yen.

ASIA’S DAY: Shares were mixed in Asia. Japan’s Nikkei 225 stock index climbed 0.6 percent, and South Korea’s Kospi rose 0.3 percent. Hong Kong’s Hang Seng fell 0.7 percent.

FED MEETING: Investors are focusing on this week’s Federal Reserve policy meeting for confirmation the U.S. central bank is ending its bond-buying program. That policy has kept long-term interest rates low to encourage borrowing and spending but also boosted stocks as investors sought higher returns. Recent mixed signals about the strength of the U.S. recovery prompted speculation that the Fed might let the program continue for longer, but many analysts consider that outcome unlikely.

Article Source: Craft, M. (2014). Stocks mostly lower as oil sinks, Europe struggles. ABC News. Retrieved from

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