Boom or Bust
economics of oil or natural gas hydrofracking are seldom analyzed from the perspective of the American consumer. Most discussions
focus upon the investment opportunities of specific companies, royalties to leaseholders, windfall tax revenues that state
governments will benefit from and the bonanza that local communities will enjoy from the added business activity. Missing
is a clear understanding of the pricing points and factors that will determine the actual selling charge and total all inclusive
retrieval costs in the domestic market. Will the price of energy drop precipitously or will the net effect be that the native
end user sees no direct benefit from the rush to drill?
risks of the fracking process are real. Policymic presents an assessment of the merits of Hydrofracking Fact and
Fiction: What You Need to Know About the Controversial Practice.
"Hydrofracking uses a lot of water: it may take several million gallons of water to
properly frack a single well. Water is the main ingredient in hydrofracking; the sand is used to help keep the fractures open
once they are created, while the mix of chemicals helps the process along and eases the flow of gas/oil. It is hard to say
what chemicals are used since most firms treat their frack mixtures as proprietary secrets, and thanks to industry lobbying
efforts, the Environmental Protection Agency ruled in 2005 that companies do not have to disclose their frack mixtures. Much
of the water used in hydrofracking eventually comes back up to the surface contaminated with hydrocarbons, sand and other
chemicals. Treatment and disposal of this used water is a major challenge to any hydrofracking operation. Environmentalists
are sounding the alarm over hydrofracking-related groundwater contamination, contending that methane gas and fracking chemicals
are migrating up from the frack locations and into local water tables."
next point starts with a specious assumption:
economic benefits of hydrofracking are obvious, but is the process too inherently dangerous to use, or can its environmental
risks be mitigated? That is the question to ponder. Unfortunately both the oil and gas industry, and environmentalists are
doing their best to make an informed debate on the issue impossible."
really reaps economic gains from this process? Clearly, the corporatists have a strategy that benefits from international
sales, while burdening local jurisdictions with the reclamation expenses from the negative eco aftermaths. Also, the effect
from actual greater production extraction costs results in selling in to markets willing to pay top prices for the oil or
Opponents of hydrofracking warn of the Fracking Economics Revealed
as Shale Gas Bubble, Not Silver Bullet.
the authors conclude that rather than offering the nation a century of cheap energy and economic prosperity, fracking will
provide only a decade of gas and oil abundance, at most, and is creating a fragile new financial bubble that is already starting to deflate. Additional research conclusions discussed
at the briefing included:
1.The shale gas and tight oil booms have been oversold. According to actual well production
data filed in many states, shale gas and shale oil reserves have been overestimated by operators by as much as 400-500 percent.
2.Wall Street has played a key behind-the-scenes role in hyping the fracking boom through
mergers and acquisitions and transactional fees, similar to the pattern seen in the housing boom that led to the financial
3.High productivity shale plays are not common. Just five gas
plays and two oil plays account for 80 percent of production of those energy sources, while the most productive areas constitute
relatively small "sweet spots" within those plays.
rates are already in decline in many shale plays. The high rates of per-well investment required to maintain production mean
U.S. shale gas production may have already peaked and maintaining production will require high rates of potentially unsustainable,
Deborah Rogers points out the most significant economic consequence from hydrofracking.
is a last ditch effort to shore up a failing balance sheet. Exportation will drive the price higher in the U.S.
There’s no doubt about it. The question is how high will it go. When you are producing a commodity and have produced
it to such a high extent, you want to find someone who will buy it, and in this case, it will be the Asians."
is the key issue. If the energy resources from fracking are destined for an export market, sold at a dramatically higher price
overseas, the pressure will increase to raise domestic prices when the oversupply vanishes.
The greed from the Fracking Boom Prompts Foreign Export
Of U.S. Gas, Could Drive Up Prices At Home, inevitably demonstrates that the public will never experience the benefits
of low cost energy produced from our own soil.
recent months, however, production has begun to level off as the glut of natural gas keeps U.S. prices down. In response,
producers have begun pushing to export the fuel to Europe and Asia, where prices are far higher.
Approval of all the projects currently under review by the Energy Department could result in the export of more than
40 percent of current U.S. production of liquefied natural gas, or LNG, which is gas that’s been converted to liquid
form to make it easier to store or transport."
internationalists, opportunistic politicians, Wall Street banksters and irresponsible developers would stash ill-gotten gain
from the pillaging of our domestic resources, as our energy rich residents get to pay a higher price for their energy needs.
Add into the equation the enormous environmental chemical pollution of our finite ground water and you have a monumental disaster
in the making.
Since safeguards and less caustic additives
can be substituted within the fracking technology, the bare minimum course is to protect the water supply. In addition, production
from such development needs to have a direct benefit to the American consumer. No fracking for export sales is the national
James Hall – June 12, 2013
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