Printer Friendly

Cheap Money Helped Inflate Energy Balloon.

The loose monetary policy applied by the US Federal Reserve, crafted to stimulate the economy after the 2007-2008 global debt crisis, may have also contributed to the shale oil boom and recent bust. The policy of reduced rates and borrowing costs may have encouraged speculative behavior as investors searched for high yields. "The increase in debt went hand in hand with a drastic increase in U.S. fracking oil production," explain Rani Molla and Lisa Abramowicz for Bloomberg News. "As it was, the spigot of cash flooding into junk bonds, master limited partnerships and other energy investment vehicles was so great it enabled both stable and shaky companies to obtain easy financing." The columnists add that fracking accounts for half of US oil production and oil output increased by more than 40 percent from 2008 to 2014, leading to a market glut, losses and insolvencies . Eventually investment losses outweighed the positive effects of lower energy prices for consumers. - YaleGlobal

Low interest rates from the US Federal Reserve encouraged oil industry boom and bust; investment losses eventually outweighing price benefits for consumers

Rani Molla and Lisa Abramowicz

Bloomberg, 20 June 2016

Read the article from Bloomberg.

Rani Molla is a Bloomberg Gadfly columnist using data visualizations to cover corporations and markets. She previously worked for the Wall Street Journal. Lisa Abramowicz is a Bloomberg Gadfly columnist covering the debt markets. She has written about debt markets for Bloomberg News since 2010. The column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Source:Bloomberg

Rights:[c]2016 Bloomberg L.P. All Rights Reserved

COPYRIGHT 2016 Yale Center for the Study of Globalization
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2016 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:YaleGlobal Online
Article Type:Brief article
Geographic Code:1USA
Date:Jun 20, 2016
Words:265
Previous Article:Brexit And The Future Of US-UK Military Cooperation.
Next Article:NATO War Games In Poland Get Russia's Attention.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters