Ever played “Old Maid”?
Remember that card game where each player has to pick cards from each others’ hand trying not to get stuck with the ‘Old Maid’ card?
Fracking has become a little like that, similar to a ponzi scheme or a fool’s game, where everyone is trying to sell the leases and natural gas before the bubble breaks and still turn a profit. This economic bubble is created by too much natural gas on the market, causing a price drop and therefore the underpinnings of initial investment will come undone. The person or company left holding the natural gas investments when this bubble breaks will be the ‘Old Maid’ (aka: lose a lot of money in the investment).
With this ‘overabundance’ of natural gas below the surface, gas prices are dropping so quickly, some even call the fracking practice uneconomical. According to the Philadelphia Inquirer, “From an average of $8.85 per million British thermal units in 2008, natural-gas prices fell sharply to $4.39 in 2010, and $3.94 in 2011. In [January], prices dropped below $2.50, and they are expected to stay under $5 for another decade.” It’s starting to seem as if the only way to turn a profit on it is by exporting it to Europe and China where gas prices are much higher.
But, exporting it leaves the “America’s Domestic Energy Source” messaging to fall flat on its face.
To complicate the natural gas market even further, businesses like Chesapeake Energyare known for ‘flipping land’ to be fracked. They do initial exploration, make projections and then sell the land at a higher cost. Chesapeake Energy is no newcomer to Airhugger. We highlighted their toxic fracking fluid spill in Pennsylvania last April. And now they’re back in the news, some even calling them the next Enron, or blaming them for creating a financial bubble worse than the housing crisis. And, with the drop in gas prices, they’ve had to make some risky financial deals and move very quickly to sell these leases so as to not become the ‘Old Maid’.
So, not only does fracking risk our clean and healthy environment, it also puts at us great economic risk. We’ve all heard the promise of hundreds of jobs, although the figure is highly debatedand the number may be far lower than predicted, but now it seems as if any jobs fracking creates will only last until this economic bubble breaks. When the fracking bubble breaks, people will lose their jobs and investments. This has the potential to add even more stress to our already strained economy.
Now, the silver lining here is that this economic perspective shows the light at the end of the tunnel. Once fracking becomes vastly uneconomical, there is a very strong chance we’ll see the end of the practice entirely. But, the big question here is ‘when?’. We’ve already heard so many concerns over contamination and environmental degradation and many are very worried about the potential health risks associated with fracking. How many more wells will be drilled too close to homes, schools and community centers before the economics prove the practice obsolete?