Fracking Industry Going Bankrupt: Karma and Redemption
After making billions of dollars poisoning groundwater, causing
illnesses, triggering earthquakes and destroying lives and communities,
fracking companies are becoming victims of their own success. It turns
out that they’ve done their jobs too well.
Just a few years ago, there was so much demand for oil and natural
gas that new fracking companies were popping up all over the place. The
competition was fierce, as small, private startup companies lined up to
enter the industry. It was an echo of the “Dot-Com Boom” back at the
turn of the century – and as it was then, so it is now. The fracking
industry is imploding. Speaking with the Wall Street Journal, IHS Energy consultant Caldwell Bailey summed it up succinctly: “Everybody kind of went crazy.”
As the exploitation of new gas and oil reserves created a glut of
supplies and demand fell in the wake of recession, the bottom dropped
out of the market. As a result, five fracking companies have filed for
bankruptcy or have ceased operations – and dozens of others are on the
edge. Currently, at least 50% of US fracking operations have become
dormant, and 55,000 workers have been laid off worldwide. For those
fracking companies remaining, projects are becoming fewer and farther
between; the number of available jobs has fallen by 40% since last year.
Furthermore, the value of those services has plummeted by about 35%.
It gets worse for these smaller surviving companies: their stocks are
falling in value (in some cases by as much as 75%), making it
increasingly difficult to raise capital. Small-to-medium fracking
companies are finding harder to get credit as regulators and bankers
argue over reserve-based loans that use energy supplies as collateral.
