In the past, sharp drops in oil prices have led to big market rallies. So what’s different this time around? After all, cheaper oil remains tantamount to a major tax cut for consumers, essentially free money that boosts spending and provides a lift for the economy.

All true. But what’s changed is that today an equally potent effect from lower oil prices is that they’ve knocked the bejesus out of the country’s most dynamic industry, oil production. While we expect the benefits from lower oil to exert the bigger pull, we don’t look for the kinds of market rallies—of 30 percent and even 40 percent—that went hand in hand with earlier drops in oil prices, as in 1985-86 or even late 1998.

Further complicating the economic outlook, within the next 12-18 months or even sooner we expect oil prices will be rallying strongly and perhaps even be headed for new highs. In short, we’re facing a tumultuous investment environment that calls for a clearheaded understanding of a competing mix of tailwinds and headwinds.

The Saudis, in dealing a massive blow to oil fracking, have likely performed a great service to the U.S. Oil fracking clearly has led to huge increases in oil production. But the costs of obtaining that oil have been far greater than is generally understood.

When talking about large amounts of energy from different sources, a useful term is “quads”, shorthand for quadrillions of BTUs. Quads not only are a quick way to refer to big numbers, they also make it possible to take into account that producing energy always entails using some energy—whether directly or indirectly—from a variety of sources.

The goal for the economy is to generate as many quads as possible while using up as few quads as possible in the process. In the most extreme negative scenario, where producing energy would require inputs of all the quads on hand, we’d be left with no net gain of energy to grow food, drive cars, heat homes, etc. Analysts generally agree that for every quad used to generate energy, we should aim to have at least four and probably five quads left over to employ elsewhere in the economy.

How does fracking measure up to this standard? The computations are complex, but it turns out that no matter what assumptions you start with, oil fracking is a losing proposition. At current rates, Department of Energy data point to 2014 as being only the fourth year in which the country will use 99.5 quads. That level is 4.5 more quads than in 2012, representing an increase of around 2.25 quads a year.  And it comes against a backdrop of slow economic growth, oil prices that until recently were relatively high, and a major push for energy efficiency. During the roaring 1990s, when energy for the most part wasn’t even part of the economic calculus, overall energy consumption rose by around 1.4 quads a year.

So why such sharp increases recently, especially given slow economic growth? The likeliest answers are new industries, particularly fracking. Of course, fracking isn’t a total dud. DOE statistics suggest hydrocarbon production since 2012 was between 6.5 and 7 quads. But even if we assume that entire amount comes from increased oil production, and none from gas, it leaves the ratio of energy produced to energy used at about 1.5.

That’s nowhere near  good enough. One expert, Charles Hall from Carnegie Mellon, estimates that in the energy-intensive auto industry, we need to produce more than three barrels of oil for every barrel used to have enough oil left over for cars to be driven. If we had to rely on fracking, we’d have no auto industry, not to mention no means of adding to overall economic growth.

In short, fracking helps the oil industry but is a road to nowhere for the economy as a whole. A body blow to the fracking industry will bring oil prices down for a relatively short time. But once fracking output is sharply reduced, oil prices will likely recover dramatically, especially given worldwide reflationary policies.

For investors, one clear message is to shun companies that generate most of their income from fracked oil. Gas fracking is a bit safer because breakeven points are lower, indicating a somewhat better return on energy used. Still, a recent study by geologists at the University of Texas (not exactly a hotbed of negative sentiment about fossil fuels) strongly suggests the DOE has greatly overestimated production from gas fracking. Nonetheless, if for some reason you feel compelled to have a stake in fracking, stick with gas producers.