Fracking Was an Extraordinary Boondoggle(nytimes.com)
nytimes.com
Fracking Was an Extraordinary Boondoggle
https://www.nytimes.com/2022/07/27/opinion/environment/energy-crisis-oil-gas-fracking.html
8 comments
Quality of 'their' life ... Their childrens children, however, have that much more of a mess to clean up. Life is hard for almost everyone. We all make choices between easy and right every day.
Life’s hardships for the laptop class != the hardships for this group of working class people
It is remarkable watching the level of contempt our industry treats them with. That We should put our children’s children’s hypothetical lives above the economic well being of an existing group of people is a mindset you find in religious groups, not highly educated tech.
It is remarkable watching the level of contempt our industry treats them with. That We should put our children’s children’s hypothetical lives above the economic well being of an existing group of people is a mindset you find in religious groups, not highly educated tech.
I dont see it as such ... rather, religious groups are too busy praising their dead elders and gods rather than looking forward to the future. Which is unfortunate, as there aint no gods or dead relatives waiting for us in the future. just the misery created by our predecessors.
David Wallace-Wells addresses that point immediately following the observation:
[Energy independence] hasn’t proved quite as useful as you might think: Because energy prices are set on global markets, domestic production doesn’t mean Americans pay less at the pump. But thanks in large part to fracking, the United States has become the world’s largest producer of both oil and gas.
And as the following 'graph notes, the real financial cost has been immense:
from 2010 to 2020, U.S. shale lost $300 billion. Previously, from 2002 to 2012, Chesapeake, the industry leader, didn’t report positive cash flow once, ending that period with total losses of some $30 billion, as Bethany McLean documents in her 2018 book, “Saudi America,” the single best and most thorough account of the fracking boom up to that point. Between mid-2012 and mid-2017, the 60 biggest fracking companies were losing an average of $9 billion each quarter. From 2006 to 2014, fracking companies lost $80 billion; in 2014, with oil at $100 a barrel, a level that seemed to promise a great cash-out, they lost $20 billion. These losses were mammoth and consistent, adding up to a total that “dwarfs anything in tech/V.C. in that time frame,” as the Bloomberg writer Joe Weisenthal pointed out recently.
My understanding of "privileged luxury" would be precisely what Wallace-Wells describes: operating a commercial concern in an utterly unprofitable and financially unsustainable manner to the tune of billions of dollars.
Fracking itself has done little to lower energy prices --- it's a high-marginal-cost operation (well, if you'll allow negative profit as a definition of "cost"), where oil prices are set at the marginal cost of production. Fracking is a response to either actual, or anticipated, high oil costs. The fact is that once committed to a course of operation, that is, developing and fracking a well, the only option for operators to minimise future losses (rather than generate actual profits) is to operate the wells to produce some revenue offsetting financing costs, at a net loss. The low-cost oil extractors (e.g., Saudi Arabia) bank that revenue in excess of costs as land rents (look up David Ricardo), laugh all the time. Further, Saudi can weaken not only the frackers but the entire US financial system (over-leveraged on fracking investments) by incrementally increasing output, and driving down prices, because as Wallace-Wells notes, oil trades globally.
Yours seems to be an exceptionally selective and counterfactual reading.
[Energy independence] hasn’t proved quite as useful as you might think: Because energy prices are set on global markets, domestic production doesn’t mean Americans pay less at the pump. But thanks in large part to fracking, the United States has become the world’s largest producer of both oil and gas.
And as the following 'graph notes, the real financial cost has been immense:
from 2010 to 2020, U.S. shale lost $300 billion. Previously, from 2002 to 2012, Chesapeake, the industry leader, didn’t report positive cash flow once, ending that period with total losses of some $30 billion, as Bethany McLean documents in her 2018 book, “Saudi America,” the single best and most thorough account of the fracking boom up to that point. Between mid-2012 and mid-2017, the 60 biggest fracking companies were losing an average of $9 billion each quarter. From 2006 to 2014, fracking companies lost $80 billion; in 2014, with oil at $100 a barrel, a level that seemed to promise a great cash-out, they lost $20 billion. These losses were mammoth and consistent, adding up to a total that “dwarfs anything in tech/V.C. in that time frame,” as the Bloomberg writer Joe Weisenthal pointed out recently.
My understanding of "privileged luxury" would be precisely what Wallace-Wells describes: operating a commercial concern in an utterly unprofitable and financially unsustainable manner to the tune of billions of dollars.
Fracking itself has done little to lower energy prices --- it's a high-marginal-cost operation (well, if you'll allow negative profit as a definition of "cost"), where oil prices are set at the marginal cost of production. Fracking is a response to either actual, or anticipated, high oil costs. The fact is that once committed to a course of operation, that is, developing and fracking a well, the only option for operators to minimise future losses (rather than generate actual profits) is to operate the wells to produce some revenue offsetting financing costs, at a net loss. The low-cost oil extractors (e.g., Saudi Arabia) bank that revenue in excess of costs as land rents (look up David Ricardo), laugh all the time. Further, Saudi can weaken not only the frackers but the entire US financial system (over-leveraged on fracking investments) by incrementally increasing output, and driving down prices, because as Wallace-Wells notes, oil trades globally.
Yours seems to be an exceptionally selective and counterfactual reading.
Note, title shortened from clickbaity "Hardly Anyone Talks About How Fracking Was an Extraordinary Boondoggle"
In the face of this, calling fracking an extraordinary boondoggle is a privileged, luxury opinion. For people less well economically situated the lower energy and oil prices enabled by fracking have made a large difference in their quality of life, directly for transporation and for the overall cost of goods. My congratulations to the author if those things aren't that important to him, but we're not all that fortunate.