Cheap oil, fracking, banks and our tax dollars

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What grassroots activists who’ve been struggling against fracking in their communities have been on their own unable to accomplish may soon happen thanks to the Saudis and their low oil prices (now down to $60/barrel and continuing to drop). OIl and gas drillers obtained cheap money from the Fed through its Quantitative Easing (QE) program and heavily invested.

The price of producing a barrel of energy is now less their break-even cost for many energy corporations. If and when oil keeps dropping, energy corporations that went into debt on risky energy ventures will go belly up. Banks, too, made huge bets via derivatives on high energy prices. These will likely implode.

However, the banks may not be on the hook for the hundreds of billions. We will. The spending bill recently passed by Congress contained a nifty provision allowing banking corporations to reverse a provision of the Dodd-Frank and have risky derivatives covered by FDIC insurance — i.e. our tax dollars.

Of course it doesn’t need saying banking corporations lobbied heavily for this change to Dodd Frank.

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