Fracking is Worth Over $100 Billion a Year to US Consumers

Where others see a U.S. energy revolution of cheap and abundant fuel, David Hughes sees a short-term bubble that will bring higher economic and environmental costs. The Canadian geoscientist, founder of the consultancy Global Sustainability Research, is part of a movement pushing back against conventional wisdom that the U.S. is on the verge of energy independence amid surging oil output and a 100-year supply of natural gas.

John Hanger points out on his energy blog that energy-related carbon dioxide emissi

Hedge fund bulls accelerated their withdrawal from U.S. natural gas markets as volatility and prices declined on abundant supply. Speculators cut their net-long position across four benchmark contracts by 11 percent in the week ended Sept. 2, the most in three weeks, U.S. Commodity Futures Trading Commission data show. Bullish wagers have declined for six consecutive months, the most in data compiled by Bloomberg since 2010. Short positions rose to a nine-month high.

While the United States is sitting on a bounty of natural gas, the wild volatility of prices this winter could soon become a regular feature as growing demand begins to test supply, potentially curbing plans to increase exports and switch power plants to gas from coal. Ample reserves have depressed prices since 2008, but sudden surges in consumption could jolt the market as early as 2015 when new exports coincide with higher domestic demand and lagging production for the fuel championed by President Barack Obama in his State of the Union speech on Tuesday.

U.S. companies hoping to export natural gas are frustrated by lengthy delays and rule changes as they await U.S. Department of Energy approval of their applications and may turn to the courts to speed up the process. Both the slow pace of decisions on applications to ship U.S. liquefied natural gas abroad and the process for making those decisions could be challenged, legal sources say.

As part of our series looking at the future of American energy, The Financialist spoke to Osmar Abib, global head of Credit Suisse’s oil and gas investment banking group, about the rise of natural gas production in the U.S., thanks in large part to the development of shale gas fields.    The shale drilling revolution that has allowed natural gas producers to access vast, previously unreachable resources has already had a profound impact on the U.S. energy sector, but what that means for the broader economy and global trade is a larger question.  

U.S. oil and gas production over the next two decades will be higher than previously expected, the government said on Wednesday, underscoring the push toward greater energy self-sufficiency and more exports of natural gas. In its annual outlook, including the first forecasts through 2040, the U.S. Energy Information Administration said imports as a share of total U.S. energy production, including oil, gas and renewables, would be 9% by 2040 against 19% in 2011 and 29% as recently as 2007.