Frack sand prices skyrocket
MIDLAND, Texas (KOSA) -Frack sand is an essential part of the drillilng process. It’s used to draw out oil and natural gas.
The price of frack sand has skyrocketed since last year.
Bloomberg reported the price of frack sand has gone up by 150% and is now about $55 a ton compared to the price of $22 a ton at the end of last year
The uptick in activity in the oil business over the past several months could be to blame for the increase in price.
In an oil boom, the surge in prices for frack sand would mean hauling companies could heavily increase their rate for the product.
But because of the recent spikes in gas prices and insurance, this doesn’t necessarily mean they will benefit from the recent price increase.
“What we’re seeing now is even with the rise in prices,” Benjamin Kail, President and CEO of Iron Wheel Energy Services, said. “Our cost of fuel is upwards of 25% sometimes even 35% even with those bumped up rates so it’s definitely having a big impact on our bottom line, the trucks aren’t nearly as profitable as they used to be.”
Kail says even with an increase in their rates for sand, the profit wouldn’t make up for the hit hauling companies take from gas and even insurance prices.
Iron Wheel is lucky that many of the companies they work for in the Permian Basin are busy.
But for the hauling companies with partners that aren’t. The recent inflation of prices seen in many aspects of the business can take a toll on everyone involved.
Kail says new technologies have helped companies like his own to cut costs and be more efficient when dealing with inflated pricing.
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