BillHustonBlog: Re: NY Times public editor likely to release report on articles by Ian Urbina tonight

Those are great questions, Mary.

The nearest thing I can figure is that, either

a) it REALLY is a Ponzi scheme,
and that means it could all fall apart quickly.

Look how fast the Enron meltdown happened.
(snap!)
This should give us hope!

Or else b) the greedy ones are seeking to "stake their claim"
and basically drill, then cap the wells

just so that they can be sitting on top of a ready supply
once the price comes back up.

It's like putting chips on the table.

With a kind of ethically-challenged market logic,
it's a "good" bet,
especially if Hubbert's Peak / Peak Oil is true,
and it almost certainly is...

That means the prices will almost certainly rise exponentially
on the down side of the production curve.
As people scramble like overpopulated rats
fighting for the last scraps of energy-cheese left on the planet.

Exponential is a word that gives myopic investors a serious stiffie.

It's bound to be a hellish, Soylent-Green kinda world
where those last energy profits will be reaped,
but the profits seem certain to be there.

So, as long as markets act like a tabulation machine,
programmed with the sole duty of maximizing profits,
without any concern for living beings,

then it should be expected
that the market-machine will be sure to sing:
DRILL BAYBEEE! DRILL!!!
when one drops a coin in the slot.

Hence, our task is to stop a steamroller.

But stopping a steamroller is completely possible!
(as long as there is a human being in the driver's seat)

BH

On Sun, Jul 17, 2011 at 12:24 AM, Mary Sweeney <mbsweeney@echoes.net> wrote:

Brisbane said that Urbina's article should have made clear that shale
gas had boomed. What I find strange about this is that a "boom" is
certainly not sufficient evidence to counter claims of a scam. There
are a lot of scams that go along swimmingly for a while in glorious
boom fashion before they finally disintegrate. If they didn't go along
swimmingly for a while, then they wouldn't be successful scams. So a
boom, by itself, doesn't signify much. Brisbane also doesn't note that
the increase in the percentage of the total U.S. gas supply that comes
from shale gas is due not only to an increase in shale gas production,
but also to a drop in conventional gas production.

An important point that came up in Urbina's article but that I thought
might have been more heavily emphasized is that the gas companies
routinely hype their star wells, representing them as if they are
typical wells when they are not. This strikes me as a form of fraud,
but even if one doesn't want to use the word fraud, it is certainly a
misleading practice, which should, in and of itself, raise a warning
flag. The practice of assuming that a well will be productive for many
decades should also raise a warning flag. And even Aubrey McClendon
admits that gas prices would have to be around $6 to make shale really
profitable, so what is going on when there is all of this drilling
frenzy at prices far lower than $6, and why is natural gas being
promoted as a cheap source of energy when prices will almost certainly
have to rise in order to support shale gas drilling and fracking? And
then, of course, there are the many environmental concerns and the
costs associated with them. Warning flags abound, even before one
reads any of the emails presented as evidence by Urbina. So if I had
been Urbina, I would have focused a little less on the emails and a
little more on the data, and then, I think, his article would have
been more difficult to criticize. On the other hand, a data-heavy
article probably would not have made it onto the front page of the
Sunday NY Times.

I do agree with one point that Brisbane made, and that is that Urbina
should have explained what was meant by an "independent," and that he
should also have clarified when he was talking about independents as
opposed to larger gas companies.

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