The Fracked-up USA Shale Gas Bubble

The Fracked-up USA Shale Gas Bubble
Mar 13 2013 | Global Research | F. William Engdahl

At a time when much of the world is looking with a mix of envy and excitement at the recent boom in USA unconventional gas from shale rock, when countries from China to Poland to France to the UK are beginning to launch their own ventures into unconventional shale gas extraction, hoping it is the cure for their energy woes, the US shale boom is revealing itself to have been a gigantic hyped confidence bubble that is already beginning to deflate. Carpe diem!

America: The New Saudi Arabia?

If we’re to believe the current media reports out of Washington and the US oil and gas industry, the United States is about to become the “new Saudi Arabia.” We are told she is suddenly and miraculously on the track to energy self-sufficiency. No longer need the US economy depend on high-risk oil or gas from the politically unstable Middle East or African countries. The Obama White House energy adviser, Heather Zichal, has even shifted her focus from pushing carbon cap ‘n trade schemes to promoting America’s “shale revolution.”^[1]

In his January 2012 State of the Union Address to Congress, President Obama claimed that, largely owing to the shale gas revolution, “We have a supply of natural gas that can last America nearly 100 years.” ^[2]

Renowned energy experts like Cambridge Energy Research’s Daniel Yergin in recent Congressional testimony waxed almost poetic about the purported benefits of the recent US shale oil and gas exploitation: “The United States is in the midst of the ‘unconventional revolution in oil and gas’ that, it becomes increasingly apparent, goes beyond energy itself.” He didn’t explain what exactly energy going beyond energy itself means. He also claimed that “the industry supports 1.7 million jobs – a considerable accomplishment given the relative newness of the technology. That number could rise to 3 million by 2020.”^[3] Very impressive numbers.

Mr Yergin went on to suggest a major geopolitical dimension of America’s shale oil and gas industry, saying “expansion of US energy exports will add an additional dimension to US influence in the world…Shale gas has risen from two percent of domestic production a decade ago to 37 percent of supply, and prices have dropped dramatically. US oil output, instead of continuing its long decline, has increased dramatically – by about 38 percent since 2008. Just the increase since 2008 is equivalent to the entire output of Nigeria, the seventh-largest producing country in OPEC…People talk about the potential geopolitical impact of the shale gas and tight oil. That impact is already here…”^[4]

In their Energy Outlook to 2030, published in 2012, BP’s CEO Bob Dudley sounded a similar upbeat projection of the role of shale gas and oil in making North America energy independent of the Middle East. BP predicted that growth in shale oil and gas supplies—“along with other fuel sources”—will make the western hemisphere virtually self-sufficient in energy by 2030. In a development with enormous geopolitical implications, a large swath of the world including North and South America would see its dependence on oil imports from potentially volatile countries in the Middle East and elsewhere disappear, BP added.^[5]

There’s only one thing wrong with all the predictions of a revitalized United States energy superpower flooding the world with its shale oil and shale gas. It’s based on a bubble, on hype from the usual Wall Street spin doctors. In reality it is becoming increasingly clear that the shale revolution is a short-term flash in the energy pan, a new Ponzi fraud, carefully built with the aid of the same Wall Street banks and their “market analyst” friends, many of whom brought us the 2000 “dot.com” bubble and, more spectacularly, the 2002-2007 US real estate securitization bubble.^[6] A more careful look at the actual performance of the shale revolution and its true costs is instructive.

Read complete essay..