US Economy
- Thread starter a_majoor
- Start date
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- 1,160
In my opinion the President needs to offer America a radical programme which I call "Five-0" the 0 being zero. I recommend that President Obama say:
"I intend to have no, zero, growth in discretionary spending for five years - for the remainder of my first term and all of my second. I encourage the congress to make spending cuts, here and there, if they can agree on any, but my cabinet secretaries will submit budgets that are, at the bottom line, exactly the same as this year - if Homeland Security, for example, wants more border guards they will have to cut somewhere else; if the Pentagon wants new ships they will have to scrap enough older ones, or bombers or Marine battalions, to pay for them, dollar for dollar, years by year. I will veto any budget that comes back from the congress with even one red cent of additional spending in any budget envelope."
"I will keep taxes where they are - except that I will do away with the Bush tax cuts for those with net earnings of more than $1 Million per person - that should protect small and medium business owners."
"But your federal government will shrink - by, at least, the rate of inflation. The national debt will stop growing - unless we have to pay more in bond interest. We will get used to the idea of living within our means, at home and abroad, and then we will find it easier to actually shrink spending and, eventually, balance our budgets.
We are in a hole; we need to stop digging - now, and we must not start digging again next month or next year or even for the next decade."
"I intend to have no, zero, growth in discretionary spending for five years - for the remainder of my first term and all of my second. I encourage the congress to make spending cuts, here and there, if they can agree on any, but my cabinet secretaries will submit budgets that are, at the bottom line, exactly the same as this year - if Homeland Security, for example, wants more border guards they will have to cut somewhere else; if the Pentagon wants new ships they will have to scrap enough older ones, or bombers or Marine battalions, to pay for them, dollar for dollar, years by year. I will veto any budget that comes back from the congress with even one red cent of additional spending in any budget envelope."
"I will keep taxes where they are - except that I will do away with the Bush tax cuts for those with net earnings of more than $1 Million per person - that should protect small and medium business owners."
"But your federal government will shrink - by, at least, the rate of inflation. The national debt will stop growing - unless we have to pay more in bond interest. We will get used to the idea of living within our means, at home and abroad, and then we will find it easier to actually shrink spending and, eventually, balance our budgets.
We are in a hole; we need to stop digging - now, and we must not start digging again next month or next year or even for the next decade."
- Reaction score
- 33
- Points
- 560
Governor Palin paid attention in economics 101 (after all, even I could figure out that QE was going to be a bust; I'm just not famous!), now the Administration gets owned yet again (as Glen Reynolds [Instapundit] would say; "Unexpectedly!"):
http://www.nysun.com/editorials/sarah-palin-for-the-fed/87317/
More unexppected. Is this the hope or the change?
http://blogs.dailymail.com/donsurber/archives/32861
http://www.nysun.com/editorials/sarah-palin-for-the-fed/87317/
More unexppected. Is this the hope or the change?
http://blogs.dailymail.com/donsurber/archives/32861
- Reaction score
- 1,107
- Points
- 1,160
A Frightening Satellite Tour Of America's Foreclosure Wastelands
Unfortunately, prices are still dropping
http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1?slop=1#boise-idaho-1-in-21-homes-in-foreclosure-the-red-dots-show-foreclosures-1
Note: The red dots shows homes currently in foreclosure. The slide title describes the fraction of homes that received foreclosure filings in 2010.
See link.
Unfortunately, prices are still dropping
http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1?slop=1#boise-idaho-1-in-21-homes-in-foreclosure-the-red-dots-show-foreclosures-1
Note: The red dots shows homes currently in foreclosure. The slide title describes the fraction of homes that received foreclosure filings in 2010.
See link.
- Reaction score
- 3
- Points
- 430
New York Times
May 8, 2011
The Unwisdom of Elites
By PAUL KRUGMAN
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe’s single currency is coming apart at the seams. How did it all go so wrong?
Well, what I’ve been hearing with growing frequency from members of the policy elite — self-appointed wise men, officials, and pundits in good standing — is the claim that it’s mostly the public’s fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate’s foolishness.
So this seems like a good time to point out that this blame-the-public view isn’t just self-serving, it’s dead wrong.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
Let me focus mainly on what happened in the United States, then say a few words about Europe.
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.
Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.
The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters.
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?
One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government.
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
http://www.nytimes.com/2011/05/09/opinion/09krugman.html?_r=1&src=ISMR_HP_LO_MST_FB
May 8, 2011
The Unwisdom of Elites
By PAUL KRUGMAN
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe’s single currency is coming apart at the seams. How did it all go so wrong?
Well, what I’ve been hearing with growing frequency from members of the policy elite — self-appointed wise men, officials, and pundits in good standing — is the claim that it’s mostly the public’s fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate’s foolishness.
So this seems like a good time to point out that this blame-the-public view isn’t just self-serving, it’s dead wrong.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
Let me focus mainly on what happened in the United States, then say a few words about Europe.
These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis.
Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis.
The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters.
Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public?
One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government.
But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead.
http://www.nytimes.com/2011/05/09/opinion/09krugman.html?_r=1&src=ISMR_HP_LO_MST_FB
- Reaction score
- 33
- Points
- 560
Political manipulation of energy markets will have huge long term negative effects (notice the cost of the drilling moratorium in the Gulf. Now expand that amount of economic activity to other areas where drilling and production occurs):
http://pajamasmedia.com/blog/gas-prices-are-high-because-the-liberals-want-it-that-way/?print=1
The "A scary strategic problem - no oil" thread demonstrates there is actually lots of oil, and various techniques exist to squeeze more out of each unit of energy produced (as well as lots of facts and figures on various green, nuclear and alternative energy sources which can help suppliment but not replace hydrocarbon fuels), so a change in the political landscape can open the door for lots of changes to the market.
http://pajamasmedia.com/blog/gas-prices-are-high-because-the-liberals-want-it-that-way/?print=1
The "A scary strategic problem - no oil" thread demonstrates there is actually lots of oil, and various techniques exist to squeeze more out of each unit of energy produced (as well as lots of facts and figures on various green, nuclear and alternative energy sources which can help suppliment but not replace hydrocarbon fuels), so a change in the political landscape can open the door for lots of changes to the market.
- Reaction score
- 0
- Points
- 410
I find all this nonsense about gas prices from the right in the USA to be hilarious. The reality seems to be from a variety of studies that even if suddenly the US Government opened a free-for-all on drilling for oil in US territory, not only would it take years to come on stream, but the impact on prices wouldn't be huge. The idea that somehow oil companies would then necessarily supply this to US customers is also hilariously wrong. They'd sell it for the highest price, and OPEC would continue to have a great impact on that price. The USA's largest supplier of oil is Canada, and while we're not a member of OPEC, we sell at the price that they are only too happy to manipulate to an extent, and to which speculators in the market happily add when they see fit.
The only thing funnier and stupider spouted by some (all righties, interestingly) is a comparison of gas prices in other countries - pointing to places like Iran etc where government subsidies exist, something I don't think too many conservatives would actually argue for, unless of course they are complete hypocrites.
The fact is, a rise in the price of gasoline isn't bad, though I'd rather have seen it be a gradual increase, like President Obama said. Oil is a scarce resource and will continue to be, and it's in our interest for a variety of reasons to use less, find alternatives, and adapt ourselves to the reality that it will become more and more expensive to extract and thus to buy. The US economy could use the growth that could come from taking the lead on this, but it seems they're too busy arguing about stupid things like abortion, funding NPR, etc, to actually really figure out where they're going for the next few years.
The only thing funnier and stupider spouted by some (all righties, interestingly) is a comparison of gas prices in other countries - pointing to places like Iran etc where government subsidies exist, something I don't think too many conservatives would actually argue for, unless of course they are complete hypocrites.
The fact is, a rise in the price of gasoline isn't bad, though I'd rather have seen it be a gradual increase, like President Obama said. Oil is a scarce resource and will continue to be, and it's in our interest for a variety of reasons to use less, find alternatives, and adapt ourselves to the reality that it will become more and more expensive to extract and thus to buy. The US economy could use the growth that could come from taking the lead on this, but it seems they're too busy arguing about stupid things like abortion, funding NPR, etc, to actually really figure out where they're going for the next few years.
Thucydides said:
- Reaction score
- 3
- Points
- 430
Seems like every time gas goes up we get the same old story in the media ........
Bicycles, e-bikes and scooter sales are up. Yet as I bike around my neighbourhood people look at me like I am too poor to own a car. :
Toronto fights back against rising gas prices
http://www.thestar.com/news/article/989236--toronto-fights-back-against-rising-gas-prices?bn=1
Bicycles, e-bikes and scooter sales are up. Yet as I bike around my neighbourhood people look at me like I am too poor to own a car. :
Toronto fights back against rising gas prices
http://www.thestar.com/news/article/989236--toronto-fights-back-against-rising-gas-prices?bn=1
- Reaction score
- 33
- Points
- 560
Failure to note that the mere announcement of the lifting of US drilling restrictions by President George W Bush caused the price of oil to collapse within 24 hr of the announcement being made suggests that you are either not understanding the response of the market to signals, or are simply attacking the messenger without reference to the message.
And of course the second part of the message demonstrating that they physical product is readily available also suggests that there is a lack of understanding about supply and demand. Supply is being manipulated and negative signals are being sent to the market, hence the price spike.
Knowing how things work can lead to the discovery of solution; trying to shout down the messengers not so much....
And of course the second part of the message demonstrating that they physical product is readily available also suggests that there is a lack of understanding about supply and demand. Supply is being manipulated and negative signals are being sent to the market, hence the price spike.
Knowing how things work can lead to the discovery of solution; trying to shout down the messengers not so much....
- Reaction score
- 0
- Points
- 410
Thucydides said:
Actually, there's little evidence anywhere that Bush's announcement had a causative effect on oil price changes, in fact, as I recall, it had more to do with the collapse of credit available to leverage speculative positions. Didn't I actually post a link on this. See, what you and the blogs you post (most of which I find laughable) fail to do is actually establish causation. It's not enough to say "Bush announced lifting of drilling restrictions and oil prices fell..." You have to actually extend that to "oil prices fell because..." and provide evidence to support that claim. I've noticed over the years that the right in particular doesn't really worry much about that, but that doesn't change anything. There's nothing wrong with attacking the message when it's incomplete, and when it's in the messenger's interests to promote that incomplete message, I also see nothing wrong with attacking them. They should know better, or do and persist because it suits those interests.
Thucydides said:
So you've just undermined your own argument, well done! If the physical product is indeed readily available (and what I've read suggests both a) it is and b) US drilling restrictions don't really stand to impact that supply much anyhow), then it is clear that there's more to the story. The impact of price speculation and ability of producers to manipulate supply (and to shift costs along their vertically integrated systems) are both contributing. Stopping deep water drilling which we know can produce disasters the industry can't control, and drilling up wildlife habibat clearly aren't going to solve those problems.
Thanks for this though, it's refreshing to see you completely undermine your nonsensical claims in one single post. BZ!
- Reaction score
- 4,690
- Points
- 1,160
There is one inescapable fact: sooner rather than later both Obama/Reid/Pelozi and Boehner/McConnel will, indeed must take some responsible actions. Those actions must include politically damaging spending cuts and equally politically damaging tax hikes. No one who matters, and Obama/Reid/Pelozi and Boehner/McConnel really don't matter much, gives a damn what the politicians think, if they do that at all, or want. The people who do matter, people like D.J. Flint, Rex Tillerson and Wang Jianzhou, will decide what spending is to be cut and what taxes are to be raised. Note that 2/3 of the people who will decide American policy for Americans are not, themselves, Americans. Both the American politicians and the American people have abrogated both their responsibility and authority because they found their silly culture wars over non-issues like gay marriage more important than governing themselves in a responsible manner. It's a wee bit sad and too bad but they - the Americans of all classes - have only themselves to blame.
- Reaction score
- 63
- Points
- 530
Its going to take money and Congress wont be giving any for this project.If Obama wants to fund it he can out of unspent TARP funds.
The good news is that a massive oil shale deposit in Texas is gearing up - unless EPA steps in. But full production is years away.
http://www.nytimes.com/2011/05/28/business/energy-environment/28shale.html?_r=1
CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.
Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.
The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.
There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.
The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.
The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.
“It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”
The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels.
“That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.”
Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm.
“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”
In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade.
The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.
The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster.
What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. “Everyone said the oil molecules are too large to flow in commercial quantities through these low-quality rocks,” said Mark G. Papa, chief executive of EOG Resources.
EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale — fracking, combined with drilling horizontally through layers of rocks — could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields.
The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months — three times faster than many traditional wells.
But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas, which faces a severe drought and rapidly diminishing water levels in the local aquifer.
At the rate wells are being drilled, “there’s definitely going to be a problem,” said Bay Laxson, a local water official.
Dave Thompson, regional production superintendent for the oil company SM Energy said the industry knew that water issues were “an Achilles heel.” He said his company was building a system to reuse water in the field.
But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states.
Thanks to the drilling boom, the recession bypassed North Dakota entirely. Here in Dimmit County, Tex., the unemployment rate has fallen in half, and sales tax receipts are up 70 percent so far this year, allowing the county to hire more police officers and buy sanitation and road repair equipment.
“In my lifetime, this is the biggest thing I’ve ever seen,” said Jose Gonzalez, 78, a retired teacher and son of migrant farm workers, who leased mineral rights to Chesapeake for $27,000 and sold another plot for $100,000 to a company building an RV park for oil workers. “You can see I’m happy.”
The good news is that a massive oil shale deposit in Texas is gearing up - unless EPA steps in. But full production is years away.
http://www.nytimes.com/2011/05/28/business/energy-environment/28shale.html?_r=1
CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.
Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.
The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.
There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.
The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.
The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.
“It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”
The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels.
“That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.”
Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm.
“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”
In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade.
The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.
The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster.
What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. “Everyone said the oil molecules are too large to flow in commercial quantities through these low-quality rocks,” said Mark G. Papa, chief executive of EOG Resources.
EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale — fracking, combined with drilling horizontally through layers of rocks — could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields.
The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months — three times faster than many traditional wells.
But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas, which faces a severe drought and rapidly diminishing water levels in the local aquifer.
At the rate wells are being drilled, “there’s definitely going to be a problem,” said Bay Laxson, a local water official.
Dave Thompson, regional production superintendent for the oil company SM Energy said the industry knew that water issues were “an Achilles heel.” He said his company was building a system to reuse water in the field.
But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states.
Thanks to the drilling boom, the recession bypassed North Dakota entirely. Here in Dimmit County, Tex., the unemployment rate has fallen in half, and sales tax receipts are up 70 percent so far this year, allowing the county to hire more police officers and buy sanitation and road repair equipment.
“In my lifetime, this is the biggest thing I’ve ever seen,” said Jose Gonzalez, 78, a retired teacher and son of migrant farm workers, who leased mineral rights to Chesapeake for $27,000 and sold another plot for $100,000 to a company building an RV park for oil workers. “You can see I’m happy.”
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Before ypu break out the bubbly, you might want to cath the documentary "GasLand" on youtube.
Note if you get the one with the zombies - its the wrong one serious.
The main visual I recall from the real one is the dude running water into his kitechen sink and then lighting the running water with a zippo.
To say that there are severe environmental consequences is putting it very mildly
Note if you get the one with the zombies - its the wrong one serious.
The main visual I recall from the real one is the dude running water into his kitechen sink and then lighting the running water with a zippo.
To say that there are severe environmental consequences is putting it very mildly
Kalatzi said:
According to the information at this site, gas in the water is naturally occurring and predates the extraction method. Further, it states that the producer of "Gasland" knew that there were documented cases of water burning dating back to 1936 and omitted that information as "irrelevant."
http://www.noteviljustwrong.com/General/gasland-director-hides-full-facts.html
