About one-third of oil and natural gas production companies (about 175 out of 500) may go bankrupt because of the drop in oil prices. With oil prices low, small firms that rely on debt to explore and drill and eventually produce are now unprofitable. Business models that made sense when oil was over $100 a barrel now are failing. Oil drilling has always been risky, so this isn’t the first time their bubble has burst; but, this may represent only one sector in the much larger commodities industry where many raw materials are experiencing falling prices. Don’t expect the big firms to have much trouble. They’re still making billions. As renewables become more successful, though, the companies that go bankrupt may not come back again signalling a shift in economic eras from consumption to sustainability. Maybe.
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