The fracking boom is ending with a bust

Source: Business Insider.

Business booms are followed by busts—the interaction of overconfidence, oversupply and diminishing returns.

That’s not just a law of the free-market system, it’s a law of human nature.

As the chart above indicates, hydraulic fracturing for natural gas is an industry entering the bust part of its cycle.

The glut of natural gas probably will continue for some time.   Gas companies would continue to pump gas even if they’re losing money.

They’ve already paid for the drilling equipment, and they’d lose less money by continuing to pump than by walking away from their sunk costs.

It’s good that New York state didn’t jump into fracking just now.   We’d have had all the problems associated with fracking and none of the benefits the come with getting in on the ground floor.

The wise thing to do just from a business point of view, aside from all environmental and climate considerations, is to keep natural gas in the ground as long as we can.  If there comes a time when we desperately need it, it will be there.

LINKS

Fracking has collapsed by Wolf Richter of Wolf Street for Business Insider.

Keystone XL, Cold War 2.0 and the GOP Vision for 2016 by Michael T. Klare for TomDispatch.  Fracking is a factor in geopolitics.

Update 2/28/15

As Bill Harvey pointed out in his comment, a decline in the number of rigs doesn’t mean a decline in production—that is, not right away.

Oil rigs and oil production in the United States

Blockadia: the climate fight’s new front

The fight against global warming consists of many local struggles that, at first glance, don’t have anything to do with climate change.

These struggles include resistance to hydraulic fracturing for natural gas, to the Alberta tar sands industry and the Keystone XL pipeline, to deep ocean oil drilling and to other destructive practices by oil, gas and coal companies.

Such destructive practices are necessary to keep the fossil fuel companies in business because all the easy-to-get oil, gas and coal has been used up.  And greenhouse gas emissions will decrease only when oil and gas drilling and coal mining decrease.

Naomi Klein in her book, THIS CHANGES EVERYTHING: Capitalism vs The Climate, reported on how these scattered local resistance movements are coming to realize they are part of a common cause.

In just one chapter, she touched on protests in Greece, Rumania, Canada’s New Brunswick, England’s Sussex, Inner Mongolia, Australia, Texas, France, Ecuador, Nigeria, West Virginia, South Dakota, North America’s Pacific Northwest and Quebec—all related directly or indirectly to stopping fossil fuel operations that would produce greenhouse gasses.

She and others call this alliance “Blockadia”.   Unlike some of the big, established environmental organizations, the grass-roots protesters do not limit themselves to lawsuits and political lobbying.  They engage in nonviolent direct action, the kind of mass defiance that Gene Sharp advocated.   These movements, more than the lobbying and lawsuits of the Big Green environmental organizations, will determine the future climate, she wrote.