Fracking will save our economy?

[SoonerCoug]

I have been seeing all these reports lately that fracking will save our economy and that we will achieve energy independence because of it. They also say that fracking will prevent inflation. Thoughts?

[All-American]

Probably a bit over optimistic, but still a force for good.

[Uncle Ted]

I have been seeing all these reports lately that fracking will save our economy and that we will achieve energy independence because of it. They also say that fracking will prevent inflation. Thoughts?

Then what the frak we waiting for?

[YOUTUBE]r7KcpgQKo2I[/YOUTUBE]

[Pheidippides]

I have been seeing all these reports lately that fracking will save our economy and that we will achieve energy independence because of it. They also say that fracking will prevent inflation. Thoughts?

Lol. Who the eff is claiming that? Fracing is a big deal, no doubt about it, and our natural gas stores are massive, but nothing is a cure-all.

[cowboy]

I think fracing, horizontal drilling, and deep sea recovery will help North America become energy independent, but not necessarily the US. I'm torn about inflation. On one hand, it could actually cause inflation because there is a huge amount of money sitting on the sidelines, that, if put to work in the energy sector, could drive prices up instead of down. On the other hand, if increased demand because of the energy sector jobs encourages investment in other sectors and capacity expands with demand, it may prove to be just what the doctor ordered.

In any case, those who say that more supply will bring the price of oil down and reduce inflation in that respect do not understand inflation. Inflation is a monetary phenomenon, and it is not affected by changes in supply.

[frank ryan]

Fracking is a huge positive for the US and Canadian economies, but we need to allow the oil and gas industries to build the infrastructure needed for the boom (Keystone Pipeline).

How bout that, I agree with you.

[Pheidippides]

I think fracing, horizontal drilling, and deep sea recovery will help North America become energy independent, but not necessarily the US. I'm torn about inflation. On one hand, it could actually cause inflation because there is a huge amount of money sitting on the sidelines, that, if put to work in the energy sector, could drive prices up instead of down. On the other hand, if increased demand because of the energy sector jobs encourages investment in other sectors and capacity expands with demand, it may prove to be just what the doctor ordered.

In any case, those who say that more supply will bring the price of oil down and reduce inflation in that respect do not understand inflation. Inflation is a monetary phenomenon, and it is not affected by changes in supply.

Right? I thought this was econ 101.

Fracing is not new, nor is horizontal drilling, but it's amazingly advanced at this point. The Chinese have natural gas stores that aren't far off from ours - massive - but they are something like 60 years behind us in fracing technology. The advances are a combination of new technology and passed-on know-how.

There are still many challenges out there. Guar gum, for example, is in short supply. You can also only use certain types of sand for fracing (effectively, anyway), and sand supply is also an issue. And the water required to properly frac a well is incredible.

Start to finish it costs maybe $10MM to drill, frac and complete a well (using East Texas as an example). That's capital intensive. Not an issue for the Exxons of the world, perhaps, but they are by nature much more conservative than your regular independent producers.

Increased regulatory scrutiny and transmission capacity are also huge issues. The Marcellus is a place a lot of people are simply refusing to work because of the regulatory environment/threat. And one of the major problems in Canada is lack of an easy market - I know they are turning an LNG import plant to an export plant there (presumably to serve Japan and similar places) but the low price of gas at Henry Hub and similar places has set back development of the secondary infrastructure.

I've said more than I should on the topic, probably.

[wuapinmon]

Am I wrong is suspecting that domestic energy production might even add to inflation because there would be less money lost to overseas energy purchases? If that money stays in the economy, wouldn't it therefore allow for more free domestic dollars to purchase other things, increasing demand, driving up prices?

Or, do I have a simplistic view of the process and need more study?

[cowboy]

Am I wrong is suspecting that domestic energy production might even add to inflation because there would be less money lost to overseas energy purchases? If that money stays in the economy, wouldn't it therefore allow for more free domestic dollars to purchase other things, increasing demand, driving up prices?

Or, do I have a simplistic view of the process and need more study?

No, you're exactly right, which is the basis of my first argument. However, increased demand will only lead to inflation if capacity and production cannot keep up. If increased demand just spurs production, then instead of inflation we have a rapidly growing economy with relatively tame inflation.

[oxcoug]

I say we ride this industry like a Florida manatee.

Good to see you keep up on your news:

http://abcnews.go.com/blogs/headline...atee-arrested/

[FMCoug]

Good to see you keep up on your news:

http://abcnews.go.com/blogs/headline...atee-arrested/

Hack.

[snowcat]

http://www.ft.com/intl/cms/s/0/1b675...#axzz2aZNMFdlq

Prince Alwaleed bin Talal, the billionaire Saudi Arabian investor, has warned that his country’s oil-dependent economy is increasingly vulnerable to competition from the US shale revolution, setting him at odds with his country’s oil ministry and Opec officials.

[Bo Diddley]

Good to see you keep up on your news:

http://abcnews.go.com/blogs/headline...atee-arrested/

I don't see anyone riding that manatee.

[Color Me Badd Fan]

I read somewhere that California has an enormous amount of shale, in fact the largest deposit in the country. Things could eventually get so bad in that state that they'll have trouble issuing municipal bonds at a decent rate, it has a horrible credit rating. Only when almost every other option is gone will California allow fracking to get them out of their mess.

[Uncle Ted]

I read somewhere that California has an enormous amount of shale, in fact the largest deposit in the country. Things could eventually get so bad in that state that they'll have trouble issuing municipal bonds at a decent rate, it has a horrible credit rating. Only when almost every other option is gone will California allow fracking to get them out of their mess.

By the time California allows that we will all be driving electric cars that are charged by T. Boone Pickens wind turbines.