America’s suffering shale patch is about the only place in the U.S. where there’s nostalgia for the dark days of the financial crisis.
While the global economy started to unravel in 2008, it was also the beginning of the biggest oil boom in U.S. history.
Domestic production, which had been steadily declining since the bust of 1986, began to climb in 2009. OPEC cut output to an average of 28.5 million barrels a day that year, putting a floor under prices. And at the heart of the shale revolution, states like North Dakota, Texas and Oklahoma enjoyed lower rates of unemployment than the rest of the U.S.
Sure, crude plummeted to $32 a barrel in December 2008, but it didn’t stay there for there for long. Analysts described it as a V-shaped bust, and by May the following year oil was back above $65. Plenty of people counted on a repeat in 2015.
“There was a false sense of confidence early this year, and this second beat-down is really going to leave its mark,” said John Kilduff, a partner at Again Capital LLC, an energy hedge fund in New York. “The prospects are kind of bleak.”
This year, thousands of oilfield workers have been laid off. OPEC is pumping 32 million barrels a day and letting their higher-cost competitors in the U.S. sweat it out. And instead of a rebound, oil tumbled below $40 a barrel again for the first time since 2008.
“It’s a boom and bust business,” Kilduff said. “This won’t last forever, just like $100 oil should never have been expected to last forever.”