It’s a Big Fracking Deal

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It’s a Big Fracking Deal

Throughout history, economic growth has depended upon the economics of energy. Everywhere that energy has become steadily cheaper and more abundant, human living standards have increased exponentially.

Muscle power from humans and animals gave way to water wheels and windmills. These were followed by coal- and wood-fired steam engines, which were replaced by internal combustion engines fueled by cheap, easy-to-use petroleum and natural gas.

Since the middle of the 20th century, nuclear fission, nuclear fusion, and photovoltaic cells have been championed as candidates to supplant fossil fuels, but implementation has been limited by the costs and safety of the technology available.

Because of the technological barriers to cheap, abundant fission, fusion, and solar, all credible forecasts show that fossil fuels will dominate through the mid-21st century, with the second half of the century being less clear. As we’ve seen in Europe, renewables like wind, water, and solar are simply not where they need to be to cost-effectively power a 24/7 industrial society.

However, within the next few years, fossil fuels will be priced, in BTU terms, equivalent to less than $75 per barrel of petroleum, based on 2014 dollars. U.S. natural gas is already there, and petroleum is headed that way.1 Once those levels are sustained:

  • Global economic growth will accelerate.
  • Billions of people at the bottom of the economic pyramid will be lifted out of wretched poverty.
  • The global fresh water crisis will be reversed or averted via desalination.
  • Information technology will become globally ubiquitous as electricity becomes available almost everywhere.
  • Food production will expand to readily meet the growing demands of a larger, more affluent population.

Admittedly, complementary technologies will be required to meet these goals, but without cheap, abundant energy, they would be impossible.

These broad benefits will accrue to people around the world, but North America will become the new epicenter of 21st century global energy development, both in the short and long term. It will largely influence the price for petroleum, natural gas, coal, methane hydrates, and even fissionables (like thorium and uranium) in much the way the Saudis have influenced oil prices since the early 1970s.2

Until recently, the idea of “peak oil” was widely accepted. Even today, some people still say the current boom will be short-lived. For instance, the Montreal-based Centre for Research on Globalization recently dismissed shale fracking as a “Ponzi scheme” and “this decade’s version of the dot-com bubble,” which is about to burst...

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