in recent years the united states has experienced large increases in oil production the increases in oil production are due in large part to a new technology hydraulic fracturing fracking fracking involves injecting a mixture of water sand and chemicals into rock formations at high pressure to release oil and natural gas a news story indicates that economies of scale in fracking may be considerably smaller than in conventional oil drilling source russell gold and theo francis the new winners and losers in americas shale boom wall street journal april 20 2014 if this view is correct what would the likely consequences be for the number of firms drilling for oil in the united states a firms will combine through mergers and acquisitions to become larger b firms will divest and spinoff operations to become smaller c there will be an scycle of new firms entering the industry d since firms can reach minimum efficient scale at a relatively low output rate there will continue to be a large number of firms drilling for oil in the united states