Game over. Almost ten years of hype soon will be over and buried together with billions of tons of contaminated mixture of water, chemicals and broken rocks responsible for devastation of countless communities and ecosystems throughout the US and the world. The bill for this misadventure is coming due while M.S.M propaganda proclaims: it’s OK, there is no problem, since US oil industry made countless billions over the years to weather price slump and cover expenses.
The problem is however, that over last decade and even before, no shale oil fracking companies, never ever, made a cent of profit from shale oil or gas, even at $120 per barrel and definitely not now. It was all Wall Street conceived, developed and driven, game of misleading and pretending, cruel game of illusion and fraud made possible by Feds deliberate ZIRP and QE+ money pump into casino-like, extremely speculative financial instruments, bordering to insanity.
As a result, formerly unethical or illegal ways of “making money” were pursued by TBTF banks and speculators such as betting on suicide of their own employees or bankruptcy of their clients due to their own purposefully wrong investment advice, highly leveraging and then cutting off credit lines to good, prosperous businesses in order to secretly acquire them for profit, a criminal version of leverage buyout theft, robbing taxpayer blind with their municipal bond/default swap hedging forced upon corrupted local government officials, robbing retirement funds blind by forcing them into yield chasing madness through worthless abstract derivatives, refusing to extend credit to companies planning to expand, well paid workforce, here in the US, suggesting much larger credit lines if company expand in China instead, and much, much more actions that could only be described as anti-American. The same attitude, Wall Street bankers exhibit toward shale oil/gas fracking industry, shamelessly betting on banker prearranged failures of their clients even after 2008 public disclosure about similar unethical or illegal acts, and ensued criminal investigation by law enforcement authorities.
But there is more. In order to boost paper profits, shale companies and Wall Street “investors” conspired to fudge shale oil production statistics, such as production rate changes, active well count, employment, longevity of the wells, excluding all sorts of costs, such as environmental costs, suspicious private loans to executives, dubious private investment activities, law suits and enormous local, state, and federal political lobbying efforts, to cover up massively money loosing core business. It is sign of time that lunacy of “drill baby drill” mantra was clearly seen as early as 8 years ago within publicly available, but “censored” by M.S.M., reports from Department of Energy, Transportation and B.L.S. showing rapid decline of consumption of oil in the US and likelihood of oil price substantial reduction or fall down, a trend that only accelerated after 2008 market collapse.
For example oil consumption by Americans fell about 50% since 2006 while driven miles drop by over 60% due to economic collapse, substantial drop in car purchases, increase of car repossession, small business bankruptcies, massive, real unemployment reaching at least 25% in 2010-2011 (over 50% for youth), rapid decline of real wages in high food inflation environment, foreclosures and densification of family dwellings due to involuntary returning “home” of low wage, underemployed or unemployed family members in order to save money and carpool. Decline of suburbs, reverse trends in immigration and telecommuting were other factors in secular decline of US oil and natural gas demand. All this started as early as in 2005.
The intensive burning of the rest of remaining 401K/IRA retirement Ponzi scheme assets, life savings, living trusts and inheritances, massive selling off furniture, cars, gold and other household assets at garage sales could not and did not help. Labor participation failed in unprecedented scale, since depressed wage market disincentives labor simply because it amounts to ridiculous worker subsidy toward already bloated with cash corporate behemoths, financing themselves through corporate bond purchasing facility, in other words, through Feds “money for nothing” program.
Facing such an outlook of utter collapse of demand for oil, sanity would require reduction or complete winding down of unprofitable production however, oil companies executives doubled down and increase output. Why? It’s because Wall Street ordered its cronies in charge of oil industries to increase debt and sell more stock. The company stock became, de facto, true product of these companies. They became Ponzi schemes like financial trusts tasked in selling paper to corrupted or deceived investors. And they did sell a lot to benefit Wall Street oligarchs.
But what about jobs and positive impact on local economy. In simple words fracking jobs are temporary and far and between. The fracking process is highly robotized. Just few specialized crew is able to drill many sites concurrently and only one can maintain tens of sites due to computerization of the well and remote control and storage monitoring. Unfortunately, due to natural hostility of locals, opposed to harmful drilling effects on their lives, there is no benefit to local economy at all. Instead, we have collapse of real estate values and increased taxpayer spending in order to fix ground water systems and roads destroyed by heavy track traffic along county roads while fracking crews are bused from the outside locations.
What’s worst that after typically 1.5 years of effective operation or less, fracking wells are abandoned and left in disrepair creating more environmental hazard for local people to deal with for decades. The lies being disseminated by shale fracking industry became so bad that local people pray that new well, being drilled in their neighborhood will be one of those thousand fakers that never produce even ounce of oil. What benefit somewhat of the shale oil fracking fiasco, are drilling technology and equipment leasing companies all run by Wall Street hedge funds and relying heavily on components imported from Asia and Europe.
However you look at it, there is nothing beneficial for people about fracking of oil/gas shale whatsoever, period. There is no demand nor need, no money to be made, no jobs to be created only land destruction and gluttony for the rich. These were conclusions reached more than 50 years ago by engineers, inventors of the fracking technology who in their wisdom urged oil industry to abandon it. And it was until greed of few brought this zombie monster back to life. In this context price war waged by Saudi Arabia against competitors including shale oil companies, only accelerates inevitable end to fracking madness and only facilitate swift slaughter of the monster. And it is a good thing.
I understand righteous indignation of the those down to earth, hard-working shale oil fracking workers or lower management of small companies, when they face the reality of coming collapse of their jobs, their careers and livelihoods, economic and social disaster that hit hard rest of America long time ago.
All of these “righteous” men of oil, however, were silent about simple fact that they willingly or unwillingly piggyback on shoulders of big global corporations which feed like pigs on ZIRP induced rampant speculations and governments subsidies all over the world. The truth is, oil workers refuse to acknowledge that they work in taxpayer supported or even funded business.
The oil workers have been duped like corn farmers, in methanol Ponzi scheme, by smooth talking Wall Street types on payroll with global oligarchs, who long time ago wrapped up their lives and ours, into financial instruments of misery and sold it back to us for price of eternal enslavement.
Let’s end this shale game once for all.