Are Frac Sand Prices Squeezing Oil Market?

Sand for fracking is now three times as expensive as it was last year, and it’s one of several reasons U.S. oil production isn’t increasing, according to an article in Business Insider.

While some of the frac sand used by drillers in Texas and New Mexico is sourced locally, a lot is actually shipped in from Wisconsin via rail. In either case, shortages of labor and transportation capacity have been complicating drillers’ efforts since at least early February.

But even if U.S. shale oil producers do manage to step up production, it may not be sufficient to replace what is missing, since shale oil is a much lighter crude compared with Russia’s heavier oil.

Ultimately it’s not clear how U.S. producers – much less the rest of the world – are going to bridge the gap left by Russia’s continued exclusion from the oil market.