It’s something that the media love to cover and considering all of the repercussions that oil has on the world, it’s no surprise why.
However, even though it’s reported on a lot, not all reports are necessarily true. In fact, a lot of them contain huge inaccuracies yet these tend to go unnoticed.
In fact, you could argue that it’s only the ‘industry’ publications that can be fully trusted on a regular basis. These, as well as some of the established companies in the field like Southlake Resources Group, are the ones which are known as good sources for the best oil-related data. Something more mainstream, such as a national newspaper, is much more likely to contain distortions.
Following on from this, we have taken some of the biggest myths we have spotted in the media over recent times in relation to oil prices. We’ll now mull over some of these misconceptions and highlight the truths you really should be buying into.
“Fracking is fueling the recent price cuts”
Fracking has been big in the news recently – we’re not going to go into too much detail about the usual headlines.
Something else that’s often reported in the media is that prices are being driven down specifically because of fracking. Some media outlets are reporting that because of an increase in supply, it’s now possible to slash the cost of oil.
Suffice to say, it’s just not true. Sure, fracking is getting bigger, but over the course of the two years there have been no serious innovations in this regard which have resulted in the price being halved.
“Goldman Sachs are always correct”
They have the name and don’t get us wrong, on a lot of occasions they are correct. However, when it comes to oil prices, Goldman Sachs aren’t necessarily always right – particularly when forecasting.
While there are several examples to choose from, perhaps the best comes from 2008. There were some reports suggesting that the price was about to rise to almost $200 – only for it to crash down to $40 sometime after.
In summary, Goldman Sachs get a lot of things right, but don’t always let their views cloud your judgement. They are very good at what they do – but in terms of forecasts, it’s sometimes better to gauge opinion from a range of sources.
“Shale wells only last a few years”
There’s actually a small element of truth in this one, although if you look at the bigger picture it’s something that’s regularly blown out of proportion in the media.
It’s generally reported that shale wells will only have a productive life of several years. The reason for this is simple; the immediate results from shale wells are excellent in the first year due to the way the well is formed. After that first year, production can drop by 75%. It will then settle down for the next couple of decades in a period which goes by the name of the “tail”.
Therefore, while the “tail” might bring smaller profits – this period is usually pure profit following the excellent return in the first year. To think that shale wells “expire” after a few years because of the way they work is ludicrous.