Tags: Zuckerman | oil | gas | export

Meet the Frackers

By    |   Friday, 15 August 2014 07:36 AM

If the U.S. economy is ever going to overcome the dead weight placed upon it by the ongoing, permanent financial crisis, it is going to have to be by creating new industries and expanding some old and neglected ones.

Therefore, it is interesting to look at the case of the shale oil industry as it tries to apply technology in an effort to make energy cheaper and more available, a development that promises to change the economics of manufacturing in this country.

Gregory Zuckerman, who wrote The Greatest Trade Ever, about the financial meltdown and has worked for The Wall Street Journal since 1996, appeared recently at the New York Public Library to present his new book, The Frackers: The Inside Story of the New Billionaire Wildcatters.

Zuckerman was not introduced by any master of ceremonies, so he dived right into a discussion of what he called "this resurgence of the production of energy in this country." He explained that he likes to write about "strikeouts and home runs" — firms that make colossal blunders or produce great achievements, subjects that provide a lot of "lessons to be learned," both for the reader and the writer.

With that background, the author concluded several years ago that there was no bigger topic in the world "than this energy revolution going on in America." He proceeded to lay out themes.

First, the nation had been running out of oil and gas, and former Federal Reserve Chair Alan Greenspan had said we needed to build ports on the Gulf Coast to enable the importation of liquid natural gas. In the meantime, domestic oil production has jumped from 5 million to 8 million barrels a day, and we are the world's largest natural gas producer and the leading producer of energy overall, so much so that this country is about to become an energy exporter, importing only 7 percent of oil from the Mideast.

For Zuckerman, this does not portend energy independence, but rather improved energy security, so that the nation will be dependent on nearly friendly countries in North America rather than hostile ones in the Mideast and Venezuela. This is enabling the creation of 2 million jobs in industries directly related to energy and in manufacturing industries that are energy-intensive. He credited this with leading energy companies moving back to the United States from abroad (he might have noted that companies are moving in the other direction due to United States imposing the highest taxes in the world on corporations, but energy costs are a third and a half of those in Asia and Europe).

Another effect of the energy boom, according to Zuckerman, is a revival of small-town America and the opportunity for many veterans without college degrees to get middle-class jobs.

Zuckerman predicted that this would also allow a Clinton-led government to resist the blandishments of the Saudis to get involved in the civil war in Syria. Addressing the environmental issues, he saw the picture as mixed, but carbon dioxide emissions are down to 1994 levels. He sees a need for careful drilling to guard against serious methane leaks.

One of the main themes, and a good point on which to conclude this article, is that the book tells the story of the wildcatter characters who led this movement, and Zuckerman emphasized that it should have been led by others, but the leading experts, the exponents of "peak oil" did not believe that America could restructure its energy industry, so they said it couldn't be done.

Thus he concluded that the so-called "experts" were wrong, just as they were in the 2008 episode of the financial crisis. This writer would say this is yet another reason not to listen to the bankers, irregulators and so-called "stakeholders" when it comes to financial policy.

(Archived video can be found here.)

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If the U.S. economy is ever going to overcome the dead weight placed upon it by the ongoing, permanent financial crisis, it is going to have to be by creating new industries and expanding some old and neglected ones.
Zuckerman, oil, gas, export
Friday, 15 August 2014 07:36 AM
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