Friday, March 30, 2012

KABOOM GOES THE MARCELLUS SHALE GAS BOOM

What's going on with shale natural gas? Derived from a controversial process known as fracking, it's 4 time more expensive to produce.
Well this boom didn’t take long to go boom. The politicians and mega-corp CEOs like Aubrey McClendon promised riches and hundreds of thousands of jobs for the poor people in rural Pennsylvania. We didn’t need to tax them or put any safety regulations on their fracking. Natural gas is selling for $2.17 per MMBtu this morning. It costs approximately $8 per MMBtu to extract shale gas through fracking. Hmm. What do you think is going to happen? How about bankruptcies, writeoffs, massive losses, no new jobs, no new riches, and contaminated pools of fracking solution left behind for the fine people of rural PA...The “Penn State Report” as it came to be known, established the gas industry’s compact with the state. It created a shell within which the industry would not be taxed heavily and not taxed at all on the gas it extracted. In return, the state was promised taxes, jobs, and economic development from the “multiplier effect” of the drilling activity and from the expected investment by leaseholder’s bonuses and royalties. Except for state leases on forest land, no income would come directly from gas production. Essentially, the state was persuaded to give up a finite commonwealth asset, worth hundreds of billions of dollars, in return for unsubstantiated promises of jobs and taxes from drilling service industries. Only a small portion of the promised “multiplier” benefits have materialized.
Read the rest here
The Burning Platform