Fracking couldn't happen to a nicer bunch of cartel members, says economics writer Megan McArdle at Newsweek and The Daily Beast.
McArdle: "OPEC meets in Vienna on Friday, a meeting that will, according to the Wall Street Journal, be a mite testy. The last few years have been flush for the cartel, with oil prices well above their historical average. Now fracking is changing all that--and hammering open fissures in the cartel that been temporarily plugged with huge wads of petrodollars.
" ... As long as prices were high ... Saudi and everyone else were pumping a lot and taking in a lot of money. But fracking threatens to change that happy equilibrium. The supply of oil will once again start rising to meet demand. And that means that the price is likely to fall.
"It probably isn't headed back to $20 a barrel any time soon; at that price, shale oil projects wouldn't be economic. But Venezuela and others cannot afford any sustained decrease in the price of oil. They have spent every petrodollar they got, neglecting investment in favor of other projects. With production declining they are absolutely dependent on the scarcity pricing that has prevailed over the last 5-8 years. They will be pressing for production cuts to maintain price."
Read the entire article here.