Fracking: Fix it or Forget It? Global Gas and Oil Prices Falling.

by Emil Morhardt

Daniel E. Klein, an energy industry consultant, writes an interesting piece about fracking problems in Natural Gas & Electricity, an industry newsletter. His approach is to look at the prognostications of the Energy Information Administration Annual Energy Outlook (AEO)—pretty much the bible of energy projections—as they have changed from 2000 to projections of where we will stand in 2040. For example, there wasn’t much shale gas until 2005 and in 2005 the AEO predicted that US natural gas imports would increase sharply in the near future. The 2014 projection, however shows the opposite: a steady increase in US exports, at least through 2024. Similarly, “peak oil” in the US has also been reversed by shale oil production, with the crude oil production in 2013 the highest in 25 years, and imports falling sharply, at least so far. Yesterday, the news was that OPEC was debating, on the one hand, decreasing oil production, so as to increase global oil prices and therefore revenues (four members wanted that), or letting production stand so as to lower prices even further to put price pressure on American fracking operations. The latter option won, at least until June when OPEC meets again, but in the short term oil prices will have little effect on American oil operations. Continue reading