The New York Times continued its assault on hydraulic farcturing for natural gas (“fracking”) over the weekend and today with two front-page articles attempting to position the unconventional gas industry as a scam.
- “Insiders Sound an Alarm Amid a Natural Gas Rush” tries to liken the industry to the dot.com bubble of the 1990s, keying off the steep decline of natural gas prices in 2008-2009; and
- “Behind Veneer, Doubt on Future of Natural Gas” relies on anonymously-sourced Obama administration e-mails to paint the industry as an obvious scam.
First, the reason for the steep decline in natural gas prices is the success (not any sort of scam-iness) of the shale gas industry. Before the shale gas boom, there was a shortage of natural gas and the U.S. imported about 15% of the natural gas consumed. But with the large scale development of shale gas, the shortage quickly turned into a glut.
This stands in stark contrast to the bursting of the dot.com bubble — as there was never any there-there for the likes of Pets.com. The 2008-2009 recession-depression has also reduced demand for gas and contributed to low gas prices.
Next, the New York Times series is an effort to scandalize and cripple the industry. Shale gas has been an energy policy game-changer. Prior to the shale gas boom, higher natural gas prices made wind power look more competitive price-wise. But low gas prices have destroyed any hopes that wind can compete with fossil fuels. So the wind/renewables industry is out to destroy the shale gas industry.
The greens also don’t like shale gas because, among other reasons, it now represents a low-cost and fossil fuel means of cutting greenhouse gas emissions in half for utilities that transition from coal to gas.
There may very well be a boom-bust aspect to shale gas — just like there was to 19th century oil development. There are lots of small business ventures in the game and some will make bad choices in the marketplace. Others will make the right choices and win. This is called capitalism and free enterprise — not fraud.