67 thoughts on “Fewer Recessions Thanks to the Shale Revolution

      • Charles probably meant to repost that Steve Goreham article… The ironic thing is that the “shale” revolution did cause a severe recession in the oil industry from 2014-2016… and it’s still affecting our equity values.

        • In fact, the full story of the “Shale Revolution” can not been told yet.

          It is too soon.

          People do look at the short term effects on some people — that’s politics.

          They usually fail to look at the long term effects on all people — that’s economics.

          The end of the shale oil and gas story looks grim right now.

          We did get lots more of domestic oil and gas, but the industry, in total, has never been profitable.

          In the long run, that is likely to be bad news.

          There were many bankruptcies in 2016, with low oil prices, and the bankruptcies
          are ramping up again in 2019 and 2020.

          Investors have apparently wasted hundreds of billions of dollars they will never get back.

          That’s a large “cost” most people ignore.

          I’ve written about the subject several times.

          Here’s the latest article:
          https://el2017.blogspot.com/2020/01/great-american-shale-oil-gas-bust-402.html

          • When oil companies go bust the oil is not junked but passed along to another owner at a lower price. Lower price means tougher competition for higher cost investments thus pain is passed on. At the end of all this it all settles at some level. Majors probably have some present reserves that were acquired at one dollar a barrel in the distant past.

          • Mr Greene, most of the BKs occurred in 2015 and
            a few more in the following year. In 2019, only one or
            two shalers went BK, with Sanchez Oil & Gas being one
            of them.

            You are correct that the industry in the main has been
            unprofitable, however, as fracking costs have declined from the preceding decade more have become profitable. Shale production costs have declined by 1/3 over the years, from as high as $12 million per well to $8 million. The cost will continue to shrink, as technology enters the mainstream. The break even point today is around $40 pb, depending on the play. Furthermore, the URR of each well has also
            dramatically increased as well [ultimate recovery rate]. In addition, there are virtually no dry well, which has plague the sector since its inception.

            And yes, I can give you a dozen or so of profitable shalers;
            after all, this is not a drive-through industry, wherein profits appear over night.

            The mineral business has always been fraught with large risks and the shale producers are no exception. The industry at large, is subject to whims of the marketplace unlike so many of its counter parts.

    • Max Hugoson / Seem to be missing text on this one.

      Try Fracking. Tags: Permian Basin, Shale gas, Shale oil.

  1. The effect of Energy Dominance. It is an economic game changer for the US domestic economy’s fundamental of money flows during expansions and energy use. No longer does US dollars during an expansion phase go primarily to financing Middle East oil sheiks’ new Gulfstream jets or palaces.

    MAGA.

    • Although the title says “Fewer Recessions Thanks to the Shale Revolution”, the reality is Zero recessions since the start of the Shale revolution.

      When did the shale revolution really kick into high gear and start its climb to US energy dominance from an economic standpoint?
      I would mark it at the Deep Water Horizon rig blow-out-disaster in April 2010 and the Obama Admin response to that as his bow to the Democrat’s climate-environmemtal backers and GreenSlime lobby.

      “Deepwater Horizon oil spill, also called Gulf of Mexico oil spill, largest marine oil spill in history, caused by an April 20, 2010, explosion on the Deepwater Horizon oil rig—located in the Gulf of Mexico, approximately 41 miles (66 km) off the coast of Louisiana—and its subsequent sinking on April 22.

      The Obama Mal-administration in the wake of the DWH disaster took GoM permitting off the table (illegally, as David Middleton has frequently written about here at WUWT), temporarily reducing production there and putting future production under question (at least for the markets).

      The effect of GoM permit banning was catalytic across US onshore oil patches with US drillers ready to deploy their newfound toys of fracking tools and skills.
      That gave fracking drillers in North Dakota, the Permian Basin, and other areas the economic kickstart to drive the fracking revolution across those fields. The effect was so dramatic that by 2014 OPEC tried desperately to kill them by flooding the world oil market to drive them out of business (the shale frackers). That oil price drive down for a year or so gave the US drivers their cheapest gas pump prices in 60 years (inflation adjusted). But it also had the opposite effect of forcing the surviving shale frackers to become lean and efficient operations.

      So like everything the Democrats try to do to engineer an outcome using the political powers of control, it always backfires on them. Sometimes it takes years or a decade, but their political scheming always backfires on them. Always. 100%.

      • Please make a list of how the environment has been harmed.
        I’m confident that everything in your list will either be a lie, or a twisting of facts.

      • Compare the environment in prosperous countries with that of impoverished countries.

        The best traveled person around here is Crispin in Waterloo but usually somewhere else. It would be interesting to get his take on the above comparison.

    • Go read the link provided by “layor nala” @ February 1, 2020 at 6:19 pm.

      That is what this post is trying to re-post.

  2. He’s absolutely right. The 70’s were one big recession caused by high energy costs. Almost killed the auto makers and started the decline in steel. The high cost of gasoline in 2008 caused people to default on their mortgages leading to the great recession.

    • Tom
      “The high cost of gasoline in 2008 caused people to default on their mortgages leading to the great recession.”

      That is baloney (Amurican), malarkey (Irish), and banana earl (Brooklyn, NY).
      You should apologize for it.

      Assume gasoline at $4 a gallon in 2008.

      Americans drive about 12,000 miles a year, on average.

      That’s 1,000 miles per month.

      At 20 mpg, that requires 50 gallons of gas a month.

      If gas had been $3 a gallon rather than $4 a gallon, the average car owner would have
      saved $50 a month.

      Of course many people in cities do not own cars.

      So, for $4 versus $3 gasoline, you are claiming an extra $50 a month for drivers, or $12.50 a week (and many DRIVERS could have driven fewer miles a week to reduce that $50 cost increase — I know I did) , actually “caused people to default on their mortgages, leading to the great recession” ??

      I suppose you believe Greta Thunberg is a real climate scientist too ?

      • Except gas was 2 dollar a gallon, and it went to four double the cost of driving to work. Energy price just do no affect just the price or fuel to drive to work, it affect everything you buy. Some when you add in Fanny and Freddy threw out house payment could not be more than 25% of your income, yes the high cost of gas and staples, was what brought the mortgage bubble to the end, add in the Demorats had elimated the uptick rule it was a mess. Up to that time 31 of the 32 recession all were prompted by high energy prices. Why do you think any thing change since then.

        • Luhman
          Do you review any data before you jump to a conclusion?

          Apparently not.

          Your claim that “31 of the 32 recession all were prompted by high energy prices.” is wrong — complete nonsense !

          Almost all recessions, which were called depressions before WWII, had nothing to do with energy prices.

          We had recessions before there were cars !

          The 1973 – 1975 Recession could be blamed on high energy prices

          The short six month1980 Recession should be blamed on a tight Monetary policy Paul Volker used to end the 1970’s inflation –but the oil price spike in 1979 probably contributed.

          Of course there could have been a recession WITHOUT any spike in oil prices, since energy prices were NOT the cause of almost all (95%) of the roughly 47 US recessions.
          https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
          .
          .
          Concerning the December 2007 Recession:
          There was no “oil shock” in 2008, like in the 1970s.

          The average price of gasoline, adjusted for inflation, increased by $1.15 a gallon from 2003 through 2007 (in 2015 US Dollars).

          Are you (falsely claiming) that caused the December 2007 Recession?

          $4 a gallon gasoline was only for a brief period in 2008, when the nation was at least six months into a recession.

          The average price of gasoline, in 2015 dollars, was higher in 2011, 2012 and 2013, than in 2008 == so why no recession in any of those years?

          My source of gasoline prices in constant dollars:
          https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015

  3. Title says it all and no explanation needed. We’be been conned into believing fossil fuels are the daemon when in fact they’re the savior.

      • Fossil fuels destroy help the planet in so many ways I’ve lost count. Down with dirty near-useless sun-squares and pinwheels. Go Solar! fossil fuels!

        Fixed again. You’re welcome.

        • If Karen actually sticks around to read any of the responses to her, I will be very surprised.
          She sounds like the type who swoops in, poops her message, then runs back to her cabal to crow about how she preached it to the heathens.

      • The delusion is strong in this one.
        I can’t think of a single way in which fossil fuels aren’t benefiting the planet.
        If you really want to destroy the planet, try creating enough solar energy to power it.

      • Karen, I know you’ll never read this (drive-by trolls rarely read the follow ups to their textual diarrhea) but he did not, he merely used an archaic spelling of the word:

        daemon.
        [ˈdēmən]
        NOUN
        1.(in ancient Greek belief) a divinity or supernatural being of a nature between gods and humans.
        2.archaic spelling of demon.

        and that’s the least of what you were wrong about in your little drive-by.

      • Petrochemicals (fossil fuels) are directly responsible for:
        The cell phone you use (insulation/casing/circuit board materials are plastic based)
        The tires on the car you drive
        The paving on the streets on which you travel in comfort
        The packaging materials in the prescriptions you take
        Numerous processes to manufacture those prescriptions
        The materials in the computer you used to post your comment
        Air Bags that protect you in an accident
        Seat Belts that are strong enough to secure you in an accident
        Aluminum so not everything you need to handle is made of Heavy Steel
        Insulation on the wiring in your house so that the electricity CAN flow without shorting out
        Frames for the glasses you need to wear
        Materials to make scratch resistant light weight glasses and Contact Lenses
        Materials to make Safety Glass so your windshield doesn’t send knife like shards into the
        …passenger compartment during an accident

        Without Coal you wouldn’t have any
        Steel in the buildings you work in
        Steel in the Car Bodies which protect you in the event of an accident
        Reinforcement in the concrete sidewalks on which you walk
        Reinforcement in the Concrete Freeway Road base on which you drive
        Reinforcement in Concrete Dams required to provide Reliable non weather dependent CO2 free energy
        Steel Pipes through which Water has been delivered to your home and sewage is removed
        …and Petrochemicals for plastic pipes for the same purpose
        Duct Tape to endure a tight seal on your HVAC ducts that keep your house comfortable

        I could continue but the laundry list is over 6000 possibilities for Petrochemical and Coal uses

        So, if you don’t want to support Coal or Oil in any way,
        Do not use the streets or sidewalk.
        Rip out all insulated wiring in your house
        throw away your cell phone, personal computer, I-pad, Television, and all other small electronic devices.
        Dump your steel bodied auto and all plastic materials.
        Ditch the Nylon Jackets and poly-fiber-filled jackets
        Eliminate any mode of transportation which requires Rubber Tires.
        Also toss any Rubber Soled Shoes you have and any shoes not made of Leather or Canvas

        Then you can live a non hypocritical life

      • Karen,
        “Go Solar!” really?
        Do you know how stupid that is?

        Do you not need electricity at night or cloudy days?
        And where do solar panels come from? Do they spring out of the ground like a tree?
        Or does it take massive hydrocarbon fuel to acquire the raw materials and manufacture and transport them at every step?
        What happens to the land underneath the panels shaded from the sun? And where does the copper wire come from that connects many thousands of individual panels?

        Solar energy will never adequately power a technological society except in niche applications.

      • Yep down with fossil fuel, up with solar. Solar cannot exist without fossil fuels. So please implemented a fossil free life for yourself, so when you starve or freeze in your cold dark place of residence put together with a stone axe, we won’t have to endure you stupidity. Oh by the way, I hope you enjoy and you outside privy, cold, flies and all. I am old enough to know what they were like since I was born right at the time of electrification or rural america and do remember outside privy for home use, I had cousin that still had that experance when i was young, at least even then the use of the Sear catlog in such of a privy was gone.

      • Brian
        There are some inaccuracies in that article, along with some shaky reasoning.
        There ARE a few frac companies buying new equipment … the small cohort of so called ‘e fracs’.
        Essentially, these companies lug around a TM 2500 turbine and power a small fleet of elctric driven pumps.
        The savings per well is about $250,000 plus as the fuel comes from onsite field gas … aka free.
        Neither Schlumberger nor Halliburton own any electric fleets.

        The bigger reason behind the downsizing of the frac fleet is that operators are now doing up to 10 to 12 stages per day frac’ing whereas in years gone by that number hovered around 5 to 7.
        Multiple operational efficiencies along with completion designs have enabled this.

        Biggest reason by far is the freakin price of WTI is about 52 bucks per, fer cryin’ out loud.
        Might as well sit on one’s ass and read a book at those prices.
        I find it amazing over the years how so many folks simply look at charts, numbers and make bizarre projections.

        The over abundance of hydrocarbons is the single biggest obstacle facing operators today.

        • Just like the first atomic bomb, there’s no “un-inventing it.” The fracking and horizontal drilling technology and tools will always be available. Most of the rig skillsets for fracking are already done in conventional wells and in offshore drilling as well now. The things that have happened are on the logistics side of things, like propant (frac sand) and chemical deliveries that have developed to support the actual frack job. Cost there have come down through competition and closer sources from suppliers that are cheaper to deliver to the rig.

          The personnel expertise can be allowed to wither and shrink to impede a rapid grow rig count growth during an expansion cycle. But as long as the government stays out of the way (i.e. politics), the necessity for energy will always be the mother of invention and innovation.

          Eventually the EU and UK will allow fracking because they will see political winds change as a population desperate for energy throws the green bastards out of power, either by the ballot box or by the pitchfork.

        • Add in a modern oil rig require only three humans on site, and can drill a well in about a third or the time, if you are wondering why all those old rigs are stacked up well that your answer. Add in no need for mud trucks today or even waste pits. The changes in oil drilling is huge. Oh by the way they no longer use trucks to haul water to a frac site, it now delivered in a pipe line, again less people needed, less cost.

  4. Wow, what a concept. Now we can all easily submit articles for consideration.

    Here’s mine: Few Words Needed To Describe Climate Alarm Irrationality — Only Head Shaking Required

  5. In about 2014 I heard Mr. Noble of Noble Energy state in an interview that 70% of all new full time jobs created that year were in the oil and gas industry.

  6. I have seen US recessions becoming less frequent and mostly more severe starting with the one that happened during President Reagan’s first term. During the early time of recovery from that recession, I predicted that the “business cycle” (as that was known then) was about to get its frequency/period slowed as a result of Japan having developed ways of making cars last longer, so that after 1980 working class Americans can buy new cars less frequently than the ~ 3 years that most working class Americans previously accepted as time to replace a car. Sadly since Reagan took office, ability of the bottom 80% of Americans to replace an aging car with a new car went down and has yet to recover. Inflation-adjusted median personal income and family income have been falling behind per-capita US GDP (both before and after taxation) after 1980 because mean/median ratio has been increasing since then, as in raises exceeding inflation changing from American-usual to mostly-reserved to the top 20% during the great recession early in Reagan’s first term.

    On a side note for full disclosure: One measure of US median inflation-adjusted (officially) income is that of men, which had a peak in 1973 that was next exceeded slightly during Bill Clinton’s second term and slightly exceeded during a minority of the time from the late 90s peak to now. However, the mean figure here grew a lot while the median one did not, due to increasing income disparity, as in the rich getting richer while the bottom 80% are “treading water”.

    • The numbers are perfectly understandable, and not concerning, unless you believe the millions of immigrants to this country (legal and otherwise) reflected the same economic profile of existing citizens, and are not heavily bottom-weighted.

      Of course the truth is, we have taken in millions of the world’s poorest people, and that distorts what the economic distribution looks like.

      In this country, a typical family can move from the very lower middle-class to the top 10% in no more than two generations doing nothing more unusual than getting an education (in evonomically-valued fields), working for thirty years, and saving.

      • One modern way the US took on immigrants in modern times is by work visas, exemplified by H-1B and H-2B visas. These visas have a stated purpose of bringing in a supply of labor at wages that most Americans would refuse for the kind of work involved. One noted example of H-2B visa use is for staffing of Mar-A-Lago.

        • The Mar-A-Largo visas are for seasonal, non-agricultural employees (servers and cooks) – i.e. minimum wage type jobs. The minimum wage in Florida is currently $8.75/hour whereas the visa are for $12.68/hour for servers and $13.31/hour for cooks (according to salon). If American minimum-wage level workers are refusing minimum wage type jobs that pay approx. 50% more than the minimum wage, it sounds more like Americans are refusing the kind of work involved regardless of the wages involved.

          • John,
            More importantly, it demonstrates either the accusatory ignorance or the specious duplicity of Donny K.

    • Despite the claims by the left, that the poor are getting poorer, study after study finds the poor having ever more stuff.

      • That’s because the left don’t look at the wealth the poor actually have (the poor in this country are a lot richer than the poor of even just a few years ago, and a lot richer than even the “middle class” of many third world nations that don’t enjoy cheap, abundant energy), instead they covet the wealth that other people have – i.e. the so called “inequality gap”

  7. I fear that, whilst the ‘Shale Revolution’ is one of the best things that have happened since the collapse of the USSR, (which is why the EU has fallen over itself to ban fracking), I have great faith that our Beloved Leaders from the Swamp together with our chums the Big Banksters, have plenty more recessions up their sleeves…

    Make sure you vote for the Donald…

  8. Correlation doesn’t equal causation, as we all know. However, fracking, while necessary to prevent recession, is not sufficient. You also need zero interest rates, thanks to the Fed (who are now active in the repo market for the first time), stock markets that increase to infinity and beyond and ever increasing budget deficits. So now recession is a thing of the past.

  9. Bernie and Elizabeth Warren say they are going to ban fracking as soon as they get in Office.

    That just goes to show how delusional they are: They think they are going to get elected!

    Hillary probably lost the 2016 election as much on her vow to shut down the coal industry as on anything else, and now Bernie and Warren think they can come out with a fracking ban and it will get them elected. It sounds like the definition of insanity.

    Between Socialism and Human-caused Climate Change, the Democrats have totally lost their minds. They are locked in to a downward spiral. They have noone who is capable of successfully leading the United States. Every one of their candidates has a fatal flaw.

  10. I think the average US household is saving something like $4,000 per year in reduced heating, electricity, and gasoline costs alone.
    Combine that with businesses sharing these savings in their operations and final cost of goods, consumers save even more.
    Aluminum smelters, steel manufacturers, $200 billion petchem buildout … list just goes on and on.

  11. The headline about fracking extending the business cycle is putting cause to correlation.
    Financial markets have been enjoying another great bubble and these have run until speculators exhaust themselves.
    The most practical approach has been to review all previous such bubble and realize that they have much in common.
    Particularly the last two which completed in 1929 and 1873.
    In those one key has been the action in the yield curve, which is the difference between short-dated and long-dated interest rates. Such as from Treasury bills to the 10-Year yield.
    “Inversion” is when short rates become higher than long rates and it is due to speculators in interest-rate markets.
    In 1929 the yield curve inverted twice as the action went from boom to bust.
    I have the US curve back to 1857 and as the 1873 Bubble was completing the curve also inverted twice.
    As of last week, the curve became inverted for the second time.
    And the rule has been that very inversion has been followed by a recession.
    And great financial bubbles have been followed by severe recessions.
    That Keynesian economics has dominated is solely because it enhances the wealth and power of the state.
    Which is, of course the only reason why climate hysteria is being promoted.
    Check out my website.

    • “And the rule has been that very inversion has been followed by a recession.”

      China’s corona virus may cause a recession in the near term. I would think that will be the case in China and probably in other nations around the world as a consequence, especially considering that many nations are close to zero growth now.

      The Unied States will probably come out with less of an economic downturn since most of U.S. GDP is made up of domestic transactions, and most of U.S. trade is done with Mexico and Canada, and as important as anything, the U.S. is now self-sufficient in oil, so this insulates the U.S. somewhat from world economic conditions.

      If there has to be a world recession, the best place to ride it out is in the United States, thanks to the policies of President Trump.

  12. Alaska Capital Juneau is a comfortable Green Valley with no highways no railways –

    Why is there no road to Juneau?

    So why is there no road to Juneau? … The road was proposed as a way to reduce costs to the state by replacing the state-run Alaska Marine Highway System with a “hard link” between Juneau and Skagway. Dec 20, 2016

    https://www.seacc.org › the_road_to…

    The Road to No Road – Southeast Alaska Conservation Council

    ____________________________________

    https://www.google.com/search?q=capital+juneau+Valley+no+highways+no+railway&oq=capital+juneau+Valley+no+highways+no+railway+&aqs=chrome.

    Juneau inhabitants –

    https://www.google.com/search?q=juneau+inhabitants&oq=juneau+inhabitants+&aqs=chrome.

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