The coming shale gas bust by James Howard Kunstler

James Howard Kunstler

James Howard Kunstler

The propaganda about the so-called “shale gas miracle” has been a great comfort to those alarmed by any hint that America’s long energy orgy might be nearing an end. But the propaganda doesn’t alter the facts. The chief fact is that the shale gas frenzy is a desperate last-ditch spree, like last-call at the tavern. Reality will compel us to make other arrangements for daily life, whether we like it or not, and probably within a few years.

Shale gas is not cheap energy and the true cost of producing it will prove to be greater than the ability of costumers to pay for it. The early shale gas “plays” that America got excited about five years ago — the Barnett in Texas, Haynesville in Louisiana, and Fayetteville in Arkansas — are flat or in decline. The Marcellus has not declined yet. A big blob of it lies in New York State, where a moratorium has kept the frackers out for six years.

Shale wells typically show production declines close to 50 percent the first year and between 80 and 95 percent within five years of production. Because of the high depletion rates, shale gas companies must drill and re-drill incessantly. Shale gas requires infinite cheap capital, and that’s a big problem. It’s a pretty poor investment model and it has mostly benefited the Wall Street firms that brokered loans to the gas producers, who ended up being the losers — along with retired people on fixed-incomes who have been deprived of normal bond interest income for years so that the Federal Reserve could juice Wall Street with near-zero interest rates and “liquidity” (or, cheap borrowed money).


Of course most ordinary citizens who oppose shale gas operations object on the basis of fracking, the “innovative” recovery process that involves the injection of toxic cocktails into the “tight” rock to bust it up and release the entrapped gas. There’s a lot to be disturbed about with fracking. In Pennsylvania, where fracking has been rampant, we’ve seen notorious cases of rural homeowners lighting the kitchen faucets on fire from methane seeping into their wells, and there is a lot of anxiety about the condition of the groundwater, generally.

The gas drillers claim that their fracking fluids are proprietary trade secrets so they don’t have to disclose their contents to the public. The notorious Halliburton Law (embedded in the Clean Air/Safe Drinking Water Act of 2005) excluded shale fracking from EPA regulation. However, it is known that the secret sauce injected into the well-bores contains toxic and cancer-causing agents such as Benzene, toluene, xylene, ethylbenzene, and many others. What’s more, these toxic cocktails are pumped out of the ground when fracking is completed and often stored in open-air holding sumps awaiting the truckers to haul them away. There these volatile chemicals off-gas into the atmosphere for the local population to enjoy.

The trucking is an additional problem. Depending on the location and geology, it can take between 300 to 1400 truck trips per well-pad to bring water in and to take the used water (mixed with chemicals) away. This huge volume of truck traffic is probably the biggest disruption to normal life on the fracking landscape and it also inevitably destroys the secondary highways that the trucks run. The public is stuck with the bill for that. Moreover, the destinations of these waste products have sometimes proven to be treatment plants not designed to handle that order of chemical contamination. There are even cases of the waste-haulers just ditching their loads along the highway to avoid the fees at the treatment plants. Think of who is associated with the “waste management” business.

There are some other big downsides to fracking. For instance, the amount of methane that escapes from a well-head makes shale gas ultimately a worse climate change culprit than coal, since methane gas is 25 times as potent in trapping heat as is carbon dioxide emitted from coal burning. Add the groundwater pollution issues and all the hype about clean energy from shale gas begins to look like a joke.

The whole desperate enterprise will probably sink on its financing model, though, long before any of the ecological arguments are ever resolved, and here’s why. Our techno-industrial economy is designed to run on cheap energy. Once energy is non-cheap, something critical happens: economic activity contracts. More capital has to be devoted to getting energy commodities out of the ground and there is less and less capital to devote to all the other things that the economy does. Non-cheap energy therefore stifles the kind of economic growth necessary to produce enough surplus wealth to pay the interest on debt. Borrowed money for capital investment is the life-blood of the techno-industrial economy. Without it, all large-scale activities contract or stop, including the exploration and production of fossil fuels and Too Big To Fail Banking.

America never had “a hundred years of shale gas” as the touts and hypesters put it. These plays last years, not decades. The illusion was spawned by deliberate statistical manipulation on the part of financial promoters trying to gin up an investment frenzy and tractable public officials who wanted desperately to put over an “optimistic” story to keep the voters happy (and keep themselves in office). American society generally has been in denial mode ever since the peak oil story moved from obscure geological journals to the Internet and ultimately into a mainstream media that only mirrored and amplified society’s wishful thinking.

The USA will never be “energy independent” in the sense that oil and gas executives and politicians have been trumpeting lately. And you can forget about America being a significant exporter of oil and gas. We’re also not going to run suburbia, DisneyWorld, WalMart, and Agri-business on any combination of alternative fuels, either. The truth of the situation is we’re going to have to inhabit the landscape of North America differently and make other arrangements for carrying civilization forward in this country. That endeavor has been the subject of my books. Start by understanding that everything we do will have to get downscaled and more local and take it from there. It’s not the end of the world, but it’s certainly the end of an era.

James Howard Kunstler is the author of The Long Emergency, Too Much Magic and the World Made By Hand novels. He lives in the upper Hudson Valley.


Kunstler at Writer’s Festival
Author James Howard Kunstler will be a featured guest at the Woodstock Writer’s Festival. A Place You Might Actually Like to Be: A Chat with James Howard Kunstler,will take place at 2 p.m. Saturday, April 5 at the Kleinert/James Arts Center, 34 Tinker Street.
Kunstler will discuss the real-world issues he tackles in his nonfiction books: the inevitable end of the oil age, the crimes of Wall Street, the looming economic collapse of industrial societies — and how he was inspired to depict the consequences of all that in his recent World Made By Hand series of novels set in the post-oil American future. The third in the four-book series, titled A History of the Future, will be published in September by The Atlantic Monthly Press. For more, see
Admission is $15 and the event is sponsored by Catskill Mountainkeeper.

There are 2 comments

  1. TonyC

    In my personal opinion…My congratulations to the author. He has managed to hit almost every untruthful or half-truthful anti-fracking talking point there is. He just left out unfounded fear mongering about earthquakes This kind of unscientific diatribe is a typical echo-chamber piece. When challenged to cite sources no doubt Gasland, debunked pseudo-scientific papers and opiniated anti-fracking position papers will be raised. Reputable sources such as government agencies will be ignored. What rubbish.

  2. catskilblue

    TONYC> I am in complete agreement, it’s easy to be an alarmist selling dubious facts to a fearful public. The tactic is build a “straw man” then focus on the danger it presents–how transparent. The facts are that the EPA has done studies and to date has not found any existing problems. In addition the wells that are drilled are considerably below the aquifers that feed our water supplies.

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