How Keynes Destroyed the Bakken

I wanted to believe that it was only going to be the banking industry that was destroyed by the "Dudebro Frat Boy Jocks from the 1970's." Middle aged men who couldn't do math and were too lazy to become engineers, so instead got their MBA's and relied on lying "sales" as a way to enrich themselves.  Slowly, but surely, they rose through the ranks so by the time 2005 rolled around they were thoroughly ensconced in positions of power in the only industry that would promote such idiotic scum - banking.  Sure enough, their greed and idiocy caught up with them, the banking industry imploded, but not without the taxpayers bailing them out.  Today they merely work at the bank down the street, thankfully relegated to the banking industry and not pouring out into and corrupting other sectors of the economy.

Or so I thought.

Enter the Bakken oil field.

With gas prices high investment into alternative means of pumping oil were produced.  One such technique was fracking and as luck would have it practically the entire middle part of the North American continent had oil reserves that were conducive to this technique.  An oil boom occurred resulting in quite literally the only silver lining to Obama's economy.  Hundreds of thousands of jobs were created, there was a cap put on the price of oil, not to mention it turned out the US now had a such supply of oil that it no longer needed to rely on or answer to OPEC.

Now, not that I was thinking we'd become the next Norway where their entire population is effectively millionaires due to their oil reserves, but I did think this oil boom would be more permanent.  At least not certainly a bust.  For while Dotcom and the Housing Bubbles were caused (primarily) by idiot investment bankers and banks, this was an oil boom.  Started by much smarter and saner engineers, scientists and geologists.  This was a STEM industry, not a cock-sucking, ass-kissing "dudebro" east coast cronyismfest. 

Add two more ingredients.

Engineer naivety about economics and Keynes.

Engineers, god bless 'em, are not economists.  I've known this because during most of college the engineering majors wish they could study more finance and economics and the finance majors wish they would have studied engineering.  Even after college many engineers go back to get their MBA's with a concentration on accounting or finance.  But at their core they're still engineers.  They're on the rigs, in the design room, or out exploring.  They're not reading up on OPEC or EIA reports about the glut of oil hitting the market.  And it wasn't OPEC that's been driving prices down as much as it was themselves.

Once I saw there was trouble in Bakken Land, I prayed, PRAYED,

"Please don't let them have a ton of debt on their books
Please don't let them have a ton of debt on their books
Please don't let them have a ton of debt on their books."

Annnnnnd they have a ton of debt on their books.

Once again, Keynesianism and the ignorance of how central-bank-induced artificially lower interest rates result in companies and governments loading up on debt, has now caused a credit bubble in the Bakken oil field.  And while some companies maintain a nice margin of equity on their balance sheets, many do not.  And with the price of oil going down, it doesn't matter how low of an interest rate they have on their newly acquired debt, they are going to shut down and file for bankruptcy.

The lesson to pull from this is you don't need lazy, middle aged MBA, Dudebro Salesmen to destroy an industry.  You just need a central bank, ZIRP monetary policy, and a dash of economic naivety on the part of industry leaders and ANY industry will be inflated and then destroyed.  Alas who knew Keynesians would be the ultimate economic "Dudebro Douches?"