Turns out the U.S. oil boom was just a fairy tale

With one quick drop in the price of oil, the shale oil boom is officially bust. In less than a week, 61 oil rigs across the United States closed up shop, according to the most recent rig count from Baker Hughes. The U.S. has 1,750 oil rigs still pumping, but that number is expected to fall by another 400 rigs by the time spring rolls around.

The whole episode is a wake-up call about just how much of a fairy tale North America’s oil boom really was. It was a fairy tale with real drills, sure — and since it was exempt from the Clean Air and Clean Water acts, it will continue to have real consequences for the people living near it. But when it costs Saudi Arabia $10 to get a barrel of oil and it costs shale oil operations around $65 to make that same barrel, it should have been obvious that America was only a titan of oil production because another country was letting us be.

The U.S. got the excitement of overtaking Saudi Arabia and becoming the biggest producer of oil in the world for a few months this summer. Then Saudi Arabia did what it always had the power to do and raised its oil output so that prices fell.

“Those who are producing the most expensive oil — the rationale and the rules of the market say that they should be the first to pull or reduce their production,” Suhail Al Mazrouei, oil minister for the United Arab Emirates, told reporters recently, sounding more than a little like an Econ 101 professor. “If the price is right for them to produce, then fine, let them produce.”

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