A Fracking Ban Would Trigger Global Recession

A fracking rig at sunset. iStock

Manhattan Institute: Issues 2020: A Fracking Ban Would Trigger Global Recession

The Narrative

"I will ban fracking—everywhere."[1] — Elizabeth Warren "Any proposal to avert the climate crisis must include a full fracking ban on public and private lands."[2] — Bernie Sanders "I favor a ban on new fracking and a rapid end to existing fracking."[3] — Pete Buttigieg

Reality

The extraction of oil and gas through the techniques of horizontal drilling and hydraulic fracturing (colloquially, “fracking”) has catapulted the United States into leadership of the world’s energy markets. Since 2007, fracking has doubled U.S. oil production and increased gas production by 60%. Instead of a major importer, America is rapidly becoming the largest exporter of oil and is expected to supply the majority of net new energy traded on global markets over the next two decades.

If the U.S. imposed a fracking ban, the supply disruption would trigger the biggest oil and natural gas price spikes in history—almost certainly by more than 200%—which would, in turn, tip the world into recession. Even the expectation that a ban could be enacted would destabilize markets. U.S. imports and the trade imbalance would soar, as would consumers’ spending on energy. To keep the lights on, America would have to nearly double the quantity of coal burned, as well as import up to 1 million barrels of oil per day for dual-fueled power plants that would lose access to natural gas.

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WNU Editor: And the pundits wonder why President Trump has the support that he does.

U.S. On The Verge of Becoming A Major Oil Exporter In Three Years

CNN: Look out, OPEC! U.S. to become top 10 oil exporter by 2020

U.S. oil production is booming. The next step: conquering the export market.

Increased shale production will transform the U.S. into one of the world's top oil exporters in just a few years, according to a new forecast by the consultancy PIRA Energy Group.
PIRA estimates that American crude exports will grow to 2.25 million barrels a day by 2020, a four-fold increase from 2016.

The boom would put the U.S. in roughly the same league as major oil exporters including the United Arab Emirates and Kuwait.

"In the years ahead, these developments position the U.S. to potentially be one of the 10 largest exporters of crude oil in the world," wrote analyst Jenna Delaney.

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WNU editor: This has geopolitical strategic implications far beyond OPEC. Europe is dependent on energy supplies from Russia .... a dependent and reliable source from the U.S. will be a counterweight to Russia and the "strings" that it puts on its contracts. Then there is Asia .... cheaper oil and energy prices are a Godsend to the growth of their economies.

Is Russian Intelligence Funding The Anti-Fracking Movment In The U.S.?

People walk away from a protest against fracking and neighborhood oil drilling in Los Angeles, California, May 14. Lucy Nicholson/Reuters

Drew Johnson, Newsweek: Intelligence: Putin Is Funding the Anti-Fracking Campaign

Recent intelligence reports show that Russia is interested in influencing more than just America's elections. Russian President Vladimir Putin and his cronies have taken aim at undermining the U.S. energy industry, as well.

Buried within the U.S. intelligence community's report on Russian activities in the presidential election is clear evidence that the Kremlin is financing and choreographing anti-fracking propaganda in the United States. By targeting fracking, Putin hopes to increase oil and gas prices, destabilize the U.S. economy and threaten America's energy independence.

Fracking, or hydraulic fracturing, is a decades-old drilling technique in which water and sand is pumped through rock at a high pressure to release previously unreachable deposits of oil and natural gas.

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WNU Editor: There are a lot of groups who oppose fracking .... with many supporters and a lot of funding. I would be surprised if these groups are dependent on Russian funding. But it is true that fracking and its impact on oil production and prices is a strategic threat to Russia .... and it is in Russia's interest (as well as OPEC's) to see these anti-fracking movements succeed.

Secretary General Of NATO: Russia Has Secretly Infiltrated Green Groups Fighting Fracking

NATO Secretary General Anders Fogh Rasmussen gestures during a joint news conference with Poland's Prime Minister Donald Tusk at the Prime Minister's Office in Warsaw May 8, 2014. Credit: Reuters/Filip Klimaszewski

Nato Boss Claims Russia Has Secretly Infiltrated Green Groups Fighting Fracking -- The Independent

The outgoing Secretary General of Nato has sparked ridicule from environmentalists after claiming that Russia is secretly orchestrating green groups opposed to fracking.

Former Danish Prime Minister Anders Fogh Rasmussen told journalists that Moscow was coordinating opposition to the controversial technology in order to promote dependence on Russian oil and gas.

“I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engaged actively with so-called non-governmental organisations - environmental organisations working against shale gas - to maintain European dependence on imported Russian gas.

“That is my interpretation,” he told a briefing at the Chatham House foreign affairs think tank in London

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Update #1: Nato claims Moscow funding anti-fracking groups -- Financial Times
Update #2: Russian spies accused of secret plot with eco-warriors against fracking -- The Australian/Times
Update #3: Putin plotting to halt UK fracking, warns Nato chief: Secretary-General claims agents are working with campaigners to make sure Europe continues reliance on Russian energy exports -- Daily Mail

My Comment: Why look at Russia when we know what Hollywood is doing .... Matt Damon's Anti-Fracking Film Backed by OPEC Member -- CNBC

“Drill, Baby Drill!”

Fracking Is Turning The US Into A Bigger Oil Producer Than Saudi Arabia -- David Usborne, The Independent

The expansion in volumes of oil and gas produced by hydraulic fracturing is taking experts and politicians by surprise, with profound consequences for US geopolitics, and even Europe’s reliance on Russian gas.

Hector Gallegos sits in the cab of his pick-up enjoying a few hours of calm. A day earlier, workers finished carting off the huge rig that had drilled three new wells beneath this small patch of south Texas farmland and he’s now getting ready to prime them for production. He reckons that about three weeks from now each will be producing 1,000 to 2,000 barrels a day. “That’s money!” he exclaims with a broad smile.

It’s also power, and not in the combustion sense. Thanks to the success of engineers like Mr Gallegos in pushing the frontiers of hydraulic fracturing, or “fracking”, to access reserves of oil trapped in shale formations, notably here in Texas and North Dakota, America is poised to displace Saudi Arabia as the world’s top producer. With that could come a hobbling of Opec and unforeseen shifts in US foreign policy.

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My Comment: I have always put my investments in the energy business (starting with Canada's oil sands in the late 1990s) .... and I have always stayed on top on what was happening in the energy markets. But I will confess that I never saw the fracking revolution coming .... not even a hint. And the fact that the U.S. is now a bigger oil producer than Saudi Arabia .... LOL .... I would have been laughed out of a room if I had predicted that 5 years ago.

Update: If you have the time .... this fascinating post from the Atlantic outlines how the fracking revolution started .... The Remarkable Story On How Fracking Changed The World's Energy Outlook.

Saudi Billionaire Prince: Fracking Technology Threatens ‘Any Oil Producing Country in the World’

Prince Al-Waleed Bin Talal (Photo: Reuters)

Saudi Billionaire Prince: Fracking Competitively Threatens ‘Any Oil Producing Country in the World’ -- CNS News

(CNSNews.com) – Saudi Arabia’s Prince Alwaleed Bin Talal, a billionaire businessman and nephew of Saudi King Abdullah, said the production of shale oil and natural gas in the United States and other countries, primarily done through fracking, is a real competitive threat to “any oil-producing country in the world,” adding that Saudi Arabia must address the issue because it is a “matter of survival.”

New shale oil discoveries “are threats to any oil-producing country in the world,” said Prince Alwaleed in an interview with The Globe and Mail. “It is a pivot moment for any oil-producing country that has not diversified. Ninety-two percent of Saudi Arabia’s annual budget comes from oil. Definitely it is a worry and a concern.”

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My Comment: In the oil industry Saudi Arabia’s Prince Alwaleed Bin Talal is a somebody whose analysis is always listened to .... and not surprisingly .... he has just been named the most influential Arab by Arabian Business.

Even The Arabs Are Starting To Notice The Geo-Political Impact Of Fracking

US To Become 'Net Energy Exporter' -- Al Jazeera

Shale gas boom rewrites geopolitical rules, as US is set to produce more petroleum than Saudi Arabia within a decade.

Some industry veterans believe it's the biggest development in the energy game since 1859, when the first US oil well gushed from beneath the earth in Titusville, Pennsylvania.

In changes that would have been unthinkable just five years ago, the US is set to become a net energy exporter in the next few years, thanks to the controversial process of fracking that is re-wiring geopolitics and the world of energy.

The practice of shooting steam and chemicals into shale rock formations to unlock energy sources previously considered marginal has "changed the world", according to one lawyer with more than 40 years of experience negotiating natural gas contracts.

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My Comment: Let's count our chickens after they have hatched.