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Saudi America: The Truth About Fracking and How It's Changing the World
"A sharp portrait of the US shale revolution." -- Financial Times
Bestselling author Bethany McLean reveals the true story of fracking's impact -- on Wall Street, the economy and geopolitics.
The technology of fracking in shale rock -- particularly in the Permian Basin in Texas -- has transformed America into the world's top producer of both oil and natural gas. The U.S. is expected to be "energy independent" and a "net exporter" in less than a decade, a move that will upend global politics, destabilize Saudi Arabia, crush Russia's chokehold over Europe, and finally bolster American power again.
Or will it?
Investigative journalist Bethany McLean digs deep into the cycles of boom and bust that have plagued the American oil industry for the past decade, from the financial wizardry and mysterious death of fracking pioneer Aubrey McClendon, to the investors who are questioning the very economics of shale itself. McLean finds that fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out. Saudi America tells a remarkable story that will persuade you to think about the power of oil in a new way.
Bestselling author Bethany McLean reveals the true story of fracking's impact -- on Wall Street, the economy and geopolitics.
The technology of fracking in shale rock -- particularly in the Permian Basin in Texas -- has transformed America into the world's top producer of both oil and natural gas. The U.S. is expected to be "energy independent" and a "net exporter" in less than a decade, a move that will upend global politics, destabilize Saudi Arabia, crush Russia's chokehold over Europe, and finally bolster American power again.
Or will it?
Investigative journalist Bethany McLean digs deep into the cycles of boom and bust that have plagued the American oil industry for the past decade, from the financial wizardry and mysterious death of fracking pioneer Aubrey McClendon, to the investors who are questioning the very economics of shale itself. McLean finds that fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out. Saudi America tells a remarkable story that will persuade you to think about the power of oil in a new way.
138 pages, Paperback
First published September 11, 2018
153 people are currently reading
1326 people want to read
About the author
Bethany McLean
10 books424 followersBethany McLean is a contributing editor to Vanity Fair magazine, and known for her work on the Enron scandal. She had been an editor at large and columnist for Fortune magazine.
McLean grew up in Hibbing and received her BA in English and mathematics at Williams College in 1992. After college and prior to joining Fortune, she worked as an investment banker for Goldman Sachs.
McLean grew up in Hibbing and received her BA in English and mathematics at Williams College in 1992. After college and prior to joining Fortune, she worked as an investment banker for Goldman Sachs.
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Displaying 1 - 30 of 96 reviews
November 16, 2018
Bethany McLean writes clearly about finance, markets, the technology of fracking, and the foibles of human nature. This is a very compact book of 130 pages that, at least as a snapshot in 2018, will educate the reader about the US fossil fuel market and the place of fracking in America’s energy and economic ranking.
The author says she approached the subject because she was skeptical about the shale revolution.
The reader is drawn into the personal, engaging story of Aubrey McClendon who, in a region known for wildcatters and unrestrained entrepreneurial optimism, established Chesapeake Energy as an early leader in fracking. McClendon’s ability to raise hundreds of millions of dollars was jaw dropping, but his tendency to overpay for drilling rights and finance a lavish personal lifestyle exceeded even his exceptional money raising skills. Chesapeake was much beloved by Wall Street as the source of enormous fees the company generated and bankers aided and abetted McClendon’s sales pitch.
McClendon persuaded investors that fracking was manufacturing, not wildcatting, because knowledge of geology and the application of horizontal drilling technology virtually guaranteed success. “It’s a simple ‘on-off’ switch.”
In truth, things were much more complicated. Fracking wells are more expensive per barrel than the production costs of foreign producers. Worse, production from such wells drops off significantly after just a couple of years (particularly with oil extraction, gas extraction having a longer life). Moreover, the price of energy is very volatile and soon after fracking production took off, prices began to decline.
Chesapeake got into financial trouble, McClendon was ousted and his successor inherited a mess. “I felt like Ernest Shackleton when I got inside the company [there were so many problems].” As for McClendon, his net worth dropped from hundreds of millions to zero, and he died in a fiery car crash which may have been a suicide.
As entertaining as this soap opera is, McLean is at her best when she discusses the economics and technology of fracking. Overall, she questions the long term profitability and sustainability of the industry. The better operators, of which she cites the conservatively managed company EOG, have managed to generate modest levels of positive cash flow.
With regard to the future, the author’s arguments are less tightly organized especially as related to renewables supplanting fossil fuels. McLean argues for husbanding our fossil fuel resources for purposes where there is no alternative to oil. She points out that hydrocarbons are essential or our food supply under current farming practices. Yields per acre have increased substantially because of hydrocarbon-based fertilizer, pesticides, and other agricultural inputs.
In sum, McLean sets out to debunk the notion that, long term, the US has become energy independent, guaranteeing America’s preeminence as a world power. Her position can be debated, but she presents her arguments clearly and the characters in this book sustain an entertaining narrative. This is a quick way for the reader to become educated about fracking and form a personal opinion about its future significance.
The author says she approached the subject because she was skeptical about the shale revolution.
The reader is drawn into the personal, engaging story of Aubrey McClendon who, in a region known for wildcatters and unrestrained entrepreneurial optimism, established Chesapeake Energy as an early leader in fracking. McClendon’s ability to raise hundreds of millions of dollars was jaw dropping, but his tendency to overpay for drilling rights and finance a lavish personal lifestyle exceeded even his exceptional money raising skills. Chesapeake was much beloved by Wall Street as the source of enormous fees the company generated and bankers aided and abetted McClendon’s sales pitch.
McClendon persuaded investors that fracking was manufacturing, not wildcatting, because knowledge of geology and the application of horizontal drilling technology virtually guaranteed success. “It’s a simple ‘on-off’ switch.”
In truth, things were much more complicated. Fracking wells are more expensive per barrel than the production costs of foreign producers. Worse, production from such wells drops off significantly after just a couple of years (particularly with oil extraction, gas extraction having a longer life). Moreover, the price of energy is very volatile and soon after fracking production took off, prices began to decline.
Chesapeake got into financial trouble, McClendon was ousted and his successor inherited a mess. “I felt like Ernest Shackleton when I got inside the company [there were so many problems].” As for McClendon, his net worth dropped from hundreds of millions to zero, and he died in a fiery car crash which may have been a suicide.
As entertaining as this soap opera is, McLean is at her best when she discusses the economics and technology of fracking. Overall, she questions the long term profitability and sustainability of the industry. The better operators, of which she cites the conservatively managed company EOG, have managed to generate modest levels of positive cash flow.
With regard to the future, the author’s arguments are less tightly organized especially as related to renewables supplanting fossil fuels. McLean argues for husbanding our fossil fuel resources for purposes where there is no alternative to oil. She points out that hydrocarbons are essential or our food supply under current farming practices. Yields per acre have increased substantially because of hydrocarbon-based fertilizer, pesticides, and other agricultural inputs.
In sum, McLean sets out to debunk the notion that, long term, the US has become energy independent, guaranteeing America’s preeminence as a world power. Her position can be debated, but she presents her arguments clearly and the characters in this book sustain an entertaining narrative. This is a quick way for the reader to become educated about fracking and form a personal opinion about its future significance.
September 10, 2018
So let’s take a minute to talk about a publisher that is putting out tiny little books on BIG TOPICS. I would like to introduce you to Columbia Global Reports, and what they are doing is making complicated real world issues accessible to everyone by publishing information in novella sized books. The idea is that it shouldn’t take anyone more than a few hours or a day to read any one of the titles from their nonfiction catalogue. They are also covering a wide range of issues from the environment, to economics, current affairs, politics, and social science. Also if you go to their website it appears they offer some sort of subscription service where you can get one of their titles each moth a smidge before their pub date. The one they are mailing out now is the one i am about to tell you about.
So I received a free review copy of Saudi America by Bethany McLean in exchange for an honest review. Thank you again to Columbia Global Reports.
For such a tiny book Bethany McLean does not waste a single word and provided one of the best outlined and researched nonfiction books I have read in a bit. Saudi America The Truth About Fracking and How It’s Changing the World assumes the reader has a fair bit of knowledge about the environment arguments and repercussions of fracking before reading this book. It isn’t McLean’s focus. McLean had seen all of the studies and scientific data that showed how bad fracking was to the environment, her question was what were the economics behind it.. One would think that if politicians and oils moguls were willing to poison the groundwater and kill the environment it must be because the profit margin was just too big to resist. You would think this but you would in almost every case be wrong.
Bethany McLean gives a detailed and unbiased history of the oil and energy industry including the people and places to provide the background needed to understand why fracking was developed and why it is continuously unreliable and failing. McLean Also does a magnificent job of showing how policy changes and laws through different presidential administrations all the way up until right now in the Trump presidency have influenced mistakes in how we go after energy.
Overall I was simply amazed at how much history and background was provided in such a small book. The arguments on the economics are well supported and it is scary that people keep trying to repeat a practice that isn't economically sound or environmentally friendly. What is that they say about people who do the same thing over and over but expect a different result? Something about insanity?
After reading this book and the huge amount I learned on a topic I already thought I knew a lot about I definitely want to read more titles by Columbia Global Reports. I love the concept of small digestable sized books for really important issues!
So I received a free review copy of Saudi America by Bethany McLean in exchange for an honest review. Thank you again to Columbia Global Reports.
For such a tiny book Bethany McLean does not waste a single word and provided one of the best outlined and researched nonfiction books I have read in a bit. Saudi America The Truth About Fracking and How It’s Changing the World assumes the reader has a fair bit of knowledge about the environment arguments and repercussions of fracking before reading this book. It isn’t McLean’s focus. McLean had seen all of the studies and scientific data that showed how bad fracking was to the environment, her question was what were the economics behind it.. One would think that if politicians and oils moguls were willing to poison the groundwater and kill the environment it must be because the profit margin was just too big to resist. You would think this but you would in almost every case be wrong.
Bethany McLean gives a detailed and unbiased history of the oil and energy industry including the people and places to provide the background needed to understand why fracking was developed and why it is continuously unreliable and failing. McLean Also does a magnificent job of showing how policy changes and laws through different presidential administrations all the way up until right now in the Trump presidency have influenced mistakes in how we go after energy.
Overall I was simply amazed at how much history and background was provided in such a small book. The arguments on the economics are well supported and it is scary that people keep trying to repeat a practice that isn't economically sound or environmentally friendly. What is that they say about people who do the same thing over and over but expect a different result? Something about insanity?
After reading this book and the huge amount I learned on a topic I already thought I knew a lot about I definitely want to read more titles by Columbia Global Reports. I love the concept of small digestable sized books for really important issues!
December 27, 2019
Oil is one ubiquitous commodity whose nips and tugs influence not only the global economy but also sways the geo political environment across continents. The price of oil can either quell the rising tide of uncertainty or produce tidal waves of frightening ramifications. This double edged paradox surrounding what is commonly and in a clichéd manner referred to as “black gold” gets further complicated by the arrival of a new “kid on the technological block” – Fracking. A term that makes environmentalists squirm with displeasure and entrepreneurs squeal in delight, fracking (the original term being ‘fracturing’), refers to the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well. In this compelling read, Bethany McLean traces the origin, players, and the geology underlying the fracking phenomena.
In particular Ms. McLean charts out the controversial and flamboyant lifestyle of the buccaneering Aubrey McClendon, who prior to ploughing his Chevrolet Tahoe SUV into an embankment at high speed on the 2nd of March, 2016, saw his personal net worth decline from a staggering US$ 3 billion to penury, virtually overnight! The former Chairman and CEO of Chesapeake Energy, McClendon transformed a bumbling start-up into a representative monarch of the fracking world, albeit for a temporary period. As Ms. McLean highlights in her book, in the fall of 2008, Forbes placed McClendon at number 134 on its list of 400 richest Americans. However, it was a net worth teetering perilously on an unstable foundation of reckless borrowing, indiscriminate spending, injudicious investments, and a personal trust in the fortunes of a fluctuating market. In highlighting the rampantly luxuriant and lavish spending habits if McClendon, Ms. McLean paraphrases one of the man’s famous quotes, “asking me what to do with extra cash is like asking a fraternity boy what to do with the beer.” But the things which McClendon did with ‘extra’, (read borrowed) cash was to say the least, eye popping! With a campus touting a 63,000 square foot day care centre, a luxurious gym and multiple cafes, McClendon extended his affluence to his personal life as well accumulating a mansion in Oklahoma, Bermuda. The person known to the industry player as “Mr. Gas” was overstretching his own capabilities to transgress dangerous boundaries.
If Chesapeake was an example in rashness, Enron Oil and Gas Resources (“EOG), a spin-off of the notorious ENRON was an epitome of rectitude and prudence. Signifying all that was NOT Chesapeake, EOG as Ms. McLean enlightens us went on to be known as “the Apple of Oil”, “the Harvard of Shale” and “the Brain Trust.” On account of its cautious ventures and alacrity, EOG is now valued at a whopping US$70 billion! Operating from ordinary instead of lofty premises, EOG in a low profile manner began accumulating land in an area called Eagle Ford Shale – a substrata of Austin Chalk – at less than US$500 an acre at a time when Chesapeake was throwing US$2000 to $3000 an acre! By 2013 EOG was in the words of Ms. McLean, “completing so called ‘monster’ wells that produced over 2,500 barrels a day.”
While profligacy and patience compete with each other in a race of attrition, their object of attention lends itself to some revealing dilemmas as Ms. McLean illustrates. The reporting of reserves to the SEC and disclosure to the investors speak diametrically different tales. For example, in the year 2014, while the industry in total reported 33 billion barrels of oil equivalent to the SEC, the corresponding number as disclosed to the investors was a whopping 163.5 billion barrels! This kind of dichotomy prevalent in the industry led legendary investors such as David Einhorn to take a pessimistic view on the future of fracking.
Ms. McLean also brings to the fore in an engaging manner the Saudi angle to the entire developments surrounding the fracking debate. The wily tactics of Ali Al-Naimi, a Bedouin shepherd turned Oil Minister in the Middle Eastern oil producing giant to counteract the burgeoning rise of the United States of America as a net exporter of oil instead of a net importer (on account of the flabbergasting discoveries of shale oil and gas) and Saudi Arabia’s dangerous dalliance with Russia to keep Iran’s production/supply under check make for some engaging read. The perils of placing optimism on shale as the next big thing is illustrated in stark detail by Ms. McLean by swelling upon the unfortunate experiences of big industry players burning their feet. Australia’s BHP Billiton which sunk US$15 billion in its purchase of the Houston based Petrohawk. As Ms. McLean illustrates, “BHP put all the assets on the block in the fall of 2014, but found no buyers, and eventually wrote off over US$ 7 billion – which begat the phrase, “pulling a BHP’ “
The future of shale oil and shale gas is both cloaked in a veneer of hope and enveloped in a cloud of susceptibility. With the ascension of Donald Trump to power, and Saudi Arabia’s avowed pledge to be a ‘non-oil dependent’ nation by 2020, the race for alternatives to oil us fast heating up. Substitutes and renewables such as solar power and hydroelectricity are doing mega rounds and are being touted as pathways to the future. But as Ms. McLean has illustrated with clarity and impartiality, the day is still far when oil makes the transition from an indispensable primary resource to being a reliable alternative.
Meanwhile the fracking rush intensifies….
In particular Ms. McLean charts out the controversial and flamboyant lifestyle of the buccaneering Aubrey McClendon, who prior to ploughing his Chevrolet Tahoe SUV into an embankment at high speed on the 2nd of March, 2016, saw his personal net worth decline from a staggering US$ 3 billion to penury, virtually overnight! The former Chairman and CEO of Chesapeake Energy, McClendon transformed a bumbling start-up into a representative monarch of the fracking world, albeit for a temporary period. As Ms. McLean highlights in her book, in the fall of 2008, Forbes placed McClendon at number 134 on its list of 400 richest Americans. However, it was a net worth teetering perilously on an unstable foundation of reckless borrowing, indiscriminate spending, injudicious investments, and a personal trust in the fortunes of a fluctuating market. In highlighting the rampantly luxuriant and lavish spending habits if McClendon, Ms. McLean paraphrases one of the man’s famous quotes, “asking me what to do with extra cash is like asking a fraternity boy what to do with the beer.” But the things which McClendon did with ‘extra’, (read borrowed) cash was to say the least, eye popping! With a campus touting a 63,000 square foot day care centre, a luxurious gym and multiple cafes, McClendon extended his affluence to his personal life as well accumulating a mansion in Oklahoma, Bermuda. The person known to the industry player as “Mr. Gas” was overstretching his own capabilities to transgress dangerous boundaries.
If Chesapeake was an example in rashness, Enron Oil and Gas Resources (“EOG), a spin-off of the notorious ENRON was an epitome of rectitude and prudence. Signifying all that was NOT Chesapeake, EOG as Ms. McLean enlightens us went on to be known as “the Apple of Oil”, “the Harvard of Shale” and “the Brain Trust.” On account of its cautious ventures and alacrity, EOG is now valued at a whopping US$70 billion! Operating from ordinary instead of lofty premises, EOG in a low profile manner began accumulating land in an area called Eagle Ford Shale – a substrata of Austin Chalk – at less than US$500 an acre at a time when Chesapeake was throwing US$2000 to $3000 an acre! By 2013 EOG was in the words of Ms. McLean, “completing so called ‘monster’ wells that produced over 2,500 barrels a day.”
While profligacy and patience compete with each other in a race of attrition, their object of attention lends itself to some revealing dilemmas as Ms. McLean illustrates. The reporting of reserves to the SEC and disclosure to the investors speak diametrically different tales. For example, in the year 2014, while the industry in total reported 33 billion barrels of oil equivalent to the SEC, the corresponding number as disclosed to the investors was a whopping 163.5 billion barrels! This kind of dichotomy prevalent in the industry led legendary investors such as David Einhorn to take a pessimistic view on the future of fracking.
Ms. McLean also brings to the fore in an engaging manner the Saudi angle to the entire developments surrounding the fracking debate. The wily tactics of Ali Al-Naimi, a Bedouin shepherd turned Oil Minister in the Middle Eastern oil producing giant to counteract the burgeoning rise of the United States of America as a net exporter of oil instead of a net importer (on account of the flabbergasting discoveries of shale oil and gas) and Saudi Arabia’s dangerous dalliance with Russia to keep Iran’s production/supply under check make for some engaging read. The perils of placing optimism on shale as the next big thing is illustrated in stark detail by Ms. McLean by swelling upon the unfortunate experiences of big industry players burning their feet. Australia’s BHP Billiton which sunk US$15 billion in its purchase of the Houston based Petrohawk. As Ms. McLean illustrates, “BHP put all the assets on the block in the fall of 2014, but found no buyers, and eventually wrote off over US$ 7 billion – which begat the phrase, “pulling a BHP’ “
The future of shale oil and shale gas is both cloaked in a veneer of hope and enveloped in a cloud of susceptibility. With the ascension of Donald Trump to power, and Saudi Arabia’s avowed pledge to be a ‘non-oil dependent’ nation by 2020, the race for alternatives to oil us fast heating up. Substitutes and renewables such as solar power and hydroelectricity are doing mega rounds and are being touted as pathways to the future. But as Ms. McLean has illustrated with clarity and impartiality, the day is still far when oil makes the transition from an indispensable primary resource to being a reliable alternative.
Meanwhile the fracking rush intensifies….
September 25, 2020
I'm stricken. My political consciousness dates back to the Bush/Gore campaign, when the issues were all about the tradeoffs of new oil exploration (deep-water drilling, Alaska, federal lands, etc). In the years since, my awareness has been limited to debates around demand reduction (energy-efficient vehicles, ethanol subsidies, single-use plastics, solar tech improvements, utilities shifting to renewable sources), the egregious role that oil companies have played in encouraging climate change denialism, and the localized environmental repercussions of fracking (water pollution, seismic activity).
Bethany McLean delivers a huge wake-up call: the oil production world has changed so radically in the last 10 years that earlier heated debates are now irrelevant. Advocacy agendas are now much more complex and cross party lines in ways that that national political discourse totally glosses over. To wit:
- Contention over oil exploration is dead. The Permian Basin in Texas has more oil than anywhere except Saudi Arabia. No one is interested in Alaska or the Dakotas or Pennsylvania any more.
- Our newfound ability to export oil completely changed our relationship with OPEC, the Saudis, and Russia, far more profoundly than I had understood.
- Fracking, like sub-prime mortgages, is entirely debt-fueled and financially unsustainable absent serious technological improvements. As Wall Street gets increasingly frustrated with the lack of profit, the funding spigot is turning off and the industry is approaching a cliff.
- The 2008 housing crisis is directly responsible for the rise in fracking. It never would have happened without the historically low interest rates.
- The oil industry is acutely aware of and planning for a snowballing shift away from oil and toward renewables, despite their pubic messaging. As in, oil investment strategies are starting from the expectation that the oil vs. renewables dynamic will change dramatically over the next 5 years.
All of this blew my mind. The entire oil conversation changed and I completely missed it.
Note: If you, like I, have already listened to Boomtown podcast episodes #9 and #12, the book adds detail but not major new insights. Hence the 3 star review. Which isn't fair to the author, but is an accurate reflection of how much this book specifically added to my understanding.
Bethany McLean delivers a huge wake-up call: the oil production world has changed so radically in the last 10 years that earlier heated debates are now irrelevant. Advocacy agendas are now much more complex and cross party lines in ways that that national political discourse totally glosses over. To wit:
- Contention over oil exploration is dead. The Permian Basin in Texas has more oil than anywhere except Saudi Arabia. No one is interested in Alaska or the Dakotas or Pennsylvania any more.
- Our newfound ability to export oil completely changed our relationship with OPEC, the Saudis, and Russia, far more profoundly than I had understood.
- Fracking, like sub-prime mortgages, is entirely debt-fueled and financially unsustainable absent serious technological improvements. As Wall Street gets increasingly frustrated with the lack of profit, the funding spigot is turning off and the industry is approaching a cliff.
- The 2008 housing crisis is directly responsible for the rise in fracking. It never would have happened without the historically low interest rates.
- The oil industry is acutely aware of and planning for a snowballing shift away from oil and toward renewables, despite their pubic messaging. As in, oil investment strategies are starting from the expectation that the oil vs. renewables dynamic will change dramatically over the next 5 years.
All of this blew my mind. The entire oil conversation changed and I completely missed it.
Note: If you, like I, have already listened to Boomtown podcast episodes #9 and #12, the book adds detail but not major new insights. Hence the 3 star review. Which isn't fair to the author, but is an accurate reflection of how much this book specifically added to my understanding.
January 24, 2019
A good primer on whats been happening with the fracking boom bust and boom.
Most of the matter has already been covered in other books; but the author compiles it well.
- Low interest rate regime helped the boom
- Pricing for Oil and gas has always been super murky
- The breakeven point for fracking ops differs from field to field, time to time and based on whats being extracted
- Shale gas may be a bigger force than shale oil
- Very very difficult to judge how much is embedded in american rocks
- Supply may just evaporate suddenly; but as soon as prices increase enough - provided capital is available - supply will come forth?
- How does the industry change at interest rates 200 bps higher?
- Why is Saudi Arabia strongly moving away from fossil fuels? May be they know something
- EVs are a potential game changer,
- But how will the hydrocarbon chain be impacted when shale oil and gas are gone?
- US oil and gas comes out because of market forces, and enterprises win or lose; whereas almost all other extractors rely on it heavily for their countries' well being, and the countries win or lose - - thats a very intg reality.
All in all - - a great short book that covers most things.
Most of the matter has already been covered in other books; but the author compiles it well.
- Low interest rate regime helped the boom
- Pricing for Oil and gas has always been super murky
- The breakeven point for fracking ops differs from field to field, time to time and based on whats being extracted
- Shale gas may be a bigger force than shale oil
- Very very difficult to judge how much is embedded in american rocks
- Supply may just evaporate suddenly; but as soon as prices increase enough - provided capital is available - supply will come forth?
- How does the industry change at interest rates 200 bps higher?
- Why is Saudi Arabia strongly moving away from fossil fuels? May be they know something
- EVs are a potential game changer,
- But how will the hydrocarbon chain be impacted when shale oil and gas are gone?
- US oil and gas comes out because of market forces, and enterprises win or lose; whereas almost all other extractors rely on it heavily for their countries' well being, and the countries win or lose - - thats a very intg reality.
All in all - - a great short book that covers most things.
February 14, 2019
An OK legislator gave me this book to read, and it scared the life out of me. OK is fracking the land at a record pace..and yes, we're producing a lot of oil. But, no, this is not sustainable. Not sustainable in the financial market, since is costs MORE to extract a barrel of oil than we can ever sell it for...the cautionary tale of OK hero, Aubrey MeClendon is frightening. It's all funny money, Monopoly money. None of it is real. And it's not geologically sustainable. There will come a day when the last barrel of oil is sucked clean from this country. And then what?
This never touches the environmental issues of fracking...only the practical ones.
Had a great conversation with the legislator, who gave me a NEW book to read. Had to admit that until last legislative Session, I didn't even understand there were two different kinds of drills and kinds of drilling: horizontal and vertical.
SO much to learn. But it is frightening for a state whose economy is built on the shifting future of a resource that is finite.
This never touches the environmental issues of fracking...only the practical ones.
Had a great conversation with the legislator, who gave me a NEW book to read. Had to admit that until last legislative Session, I didn't even understand there were two different kinds of drills and kinds of drilling: horizontal and vertical.
SO much to learn. But it is frightening for a state whose economy is built on the shifting future of a resource that is finite.
July 2, 2019
Columbia Global Reports (a publishing division from Columbia University) commissioned Bethany McLean (Co-author of Enron: ‘The Smartest Guys in the Room’) to write on fracking from a financial perspective. The resulting 131 pages offers new ways to understand the world that can be read in less than a day.
I was conflicted whether to give this book 4*s or 5*s, but decided on 5 because the topic is SO complicated, I do not know how Bethany McLean could have done better in a short book. There are many intertwined pieces of information that tell the reality of fracking within the geopolitical world, and there are many unanswered questions. “The earth’s geology is far too complex to give itself up to easy modeling.” (pg 96)
There is much to learn from this book, including the connection and effect on Saudi Arabia, to the unbelievable stream of capital provided by Wall Street.
My big takeaways:
Fracking killed coal. As always, it is a matter of money. Natural gas power plants are cheaper to build than coal plants. Wall Street is financing fracking.
The Permian Basin, straddling SE New Mexico and West Texas produces more fuel than 8 of the 13 members of OPEC.
China is importing record amounts of US crude. In April of 2019, crude imports were 10.64 million barrels per day (bpd), according to data from the Chinese General Administration of Customs.
What US politicians are overlooking: Shale wells DO deplete. China is determined to rebalance it’s energy mix. China is phasing in a ban on fossil-fuel powered vehicles; China now accounts for 45% of global investment in renewable energy, spending 3 to 1 on renewables compared to the USA.
Hydrocarbons help feed this nation, partly due to nitrogenous fertilizers and other agricultural products. All future generations will need to eat. Will the USA be sorry it “burned” through these reserves and sold them off to China? Perhaps we would be better to delay the gratification of the billionaires, and make more of an effort to rebalance our own energy mix.
I was conflicted whether to give this book 4*s or 5*s, but decided on 5 because the topic is SO complicated, I do not know how Bethany McLean could have done better in a short book. There are many intertwined pieces of information that tell the reality of fracking within the geopolitical world, and there are many unanswered questions. “The earth’s geology is far too complex to give itself up to easy modeling.” (pg 96)
There is much to learn from this book, including the connection and effect on Saudi Arabia, to the unbelievable stream of capital provided by Wall Street.
My big takeaways:
Fracking killed coal. As always, it is a matter of money. Natural gas power plants are cheaper to build than coal plants. Wall Street is financing fracking.
The Permian Basin, straddling SE New Mexico and West Texas produces more fuel than 8 of the 13 members of OPEC.
China is importing record amounts of US crude. In April of 2019, crude imports were 10.64 million barrels per day (bpd), according to data from the Chinese General Administration of Customs.
What US politicians are overlooking: Shale wells DO deplete. China is determined to rebalance it’s energy mix. China is phasing in a ban on fossil-fuel powered vehicles; China now accounts for 45% of global investment in renewable energy, spending 3 to 1 on renewables compared to the USA.
Hydrocarbons help feed this nation, partly due to nitrogenous fertilizers and other agricultural products. All future generations will need to eat. Will the USA be sorry it “burned” through these reserves and sold them off to China? Perhaps we would be better to delay the gratification of the billionaires, and make more of an effort to rebalance our own energy mix.
October 2, 2018
Good primer/intro/overview of fracking/"the shale revolution", fueled more by cheap debt than new tech.
I had little to no knowledge about the topic, and I am happy I got to read this book.
Some things discussed:
- differences between natural gas & oil
- boom & bust in the shale companies
- impact of shale oil & gas on the world (US has more own resources & oversupply lowers prices)
- oil influence on geopolitics
- OPEC trying to hurt US shale with low oil prices
- but low oil prices hurt Middle East & others
- US LNG or liquefied natural gas to weaken the Russian grip on Europe
-recent new fracking boom with new tech, Permian basin.. fueled by new tech, but still mostly by cheap debt. Low interest rates, but also people/institutions looking for yield, picking up "high yield" debt.
- shale oil might be a 5 year thing
- Saudi Arabia got used to spending a lot with high oil prices, hard to reduce spending now. Low cost producer of oil, but not very good at budgetting ("fiscal break-even oil price")
- New crown prince, MBS, trying to reduce Saudi's reliance on oil
- Venezuela f***ed by low oil prices, US shale dealing crushing blow to imports from African OPEC
- Independence of oil imports might be good for US on one hand, but global turmoil probably isn't.
- Low cost energy prices in US are a boom for energy intensive manufacturing (refining & chemical industries) => new billion dollar investments in that area
- Trump administration wants to save coal, but "Cheap natural gas is what’s destroying coal, not tree-hugging liberals."
- Pure renewables future is more realistic with backup from natural gas, as solar/wind energy can't be stored (without batteries)
- The case for "imported oil is not your enemy, it's your friend":
having it stored for later use, might be a valuable strategic asset
hydrocarbons are more than just oil & gas as energy. It's used in chemicals industry and agriculture fertilizer
I had little to no knowledge about the topic, and I am happy I got to read this book.
Some things discussed:
- differences between natural gas & oil
- boom & bust in the shale companies
- impact of shale oil & gas on the world (US has more own resources & oversupply lowers prices)
- oil influence on geopolitics
- OPEC trying to hurt US shale with low oil prices
- but low oil prices hurt Middle East & others
- US LNG or liquefied natural gas to weaken the Russian grip on Europe
-recent new fracking boom with new tech, Permian basin.. fueled by new tech, but still mostly by cheap debt. Low interest rates, but also people/institutions looking for yield, picking up "high yield" debt.
- shale oil might be a 5 year thing
- Saudi Arabia got used to spending a lot with high oil prices, hard to reduce spending now. Low cost producer of oil, but not very good at budgetting ("fiscal break-even oil price")
- New crown prince, MBS, trying to reduce Saudi's reliance on oil
- Venezuela f***ed by low oil prices, US shale dealing crushing blow to imports from African OPEC
- Independence of oil imports might be good for US on one hand, but global turmoil probably isn't.
- Low cost energy prices in US are a boom for energy intensive manufacturing (refining & chemical industries) => new billion dollar investments in that area
- Trump administration wants to save coal, but "Cheap natural gas is what’s destroying coal, not tree-hugging liberals."
- Pure renewables future is more realistic with backup from natural gas, as solar/wind energy can't be stored (without batteries)
- The case for "imported oil is not your enemy, it's your friend":
having it stored for later use, might be a valuable strategic asset
hydrocarbons are more than just oil & gas as energy. It's used in chemicals industry and agriculture fertilizer
October 10, 2020
I read this book in a day, as it is a very easy read and quite short as far as the size of average books go.
It was interesting enough to keep going and finish the book, but overall I don't feel like I learned much.
There are numerous pages dedicated to Former Chesapeake CEO Aubrey McClendon, but as a former Chesapeake shareholder I was already well aware of his shenanigans after after several news pieces caused the stock to tank and question their corporate governance.
The gist of the book is that fracking is expensive and most of the fracking companies plowed billions into the ground and never pulled anything close to their investment out and then many declared bankruptcy.
It would have been nice to have a comparison of marginal costs per barrel per basin since many pages were devoted to the Bakken and Permian basins. Page 88 briefly mentions costs in the Permian, but the author is wishy-washy using words like 'supposedly' and 'some insist' when talking about it. It comes across as lazy since I'm sure if I were to dig into some E&P quarterly reports I could get some reported numbers.
However, it was a good point that the reported Saudi cost per barrel doesn't account for the social freebies to their citizens that their whole economy depends on.
While there were a few pages criticizing Trump's decision for trying to bring coal back to life, I detected no political bias, which is refreshing in today's day and age.
If you really want to learn about oil and gas, check out "Oil 101" written by a former oil trader Morgan Downey that goes in-depth on the oil industry (like 1000 pages worth). However, it is a little out of date because the book was written before shale started taking off.
It was interesting enough to keep going and finish the book, but overall I don't feel like I learned much.
There are numerous pages dedicated to Former Chesapeake CEO Aubrey McClendon, but as a former Chesapeake shareholder I was already well aware of his shenanigans after after several news pieces caused the stock to tank and question their corporate governance.
The gist of the book is that fracking is expensive and most of the fracking companies plowed billions into the ground and never pulled anything close to their investment out and then many declared bankruptcy.
It would have been nice to have a comparison of marginal costs per barrel per basin since many pages were devoted to the Bakken and Permian basins. Page 88 briefly mentions costs in the Permian, but the author is wishy-washy using words like 'supposedly' and 'some insist' when talking about it. It comes across as lazy since I'm sure if I were to dig into some E&P quarterly reports I could get some reported numbers.
However, it was a good point that the reported Saudi cost per barrel doesn't account for the social freebies to their citizens that their whole economy depends on.
While there were a few pages criticizing Trump's decision for trying to bring coal back to life, I detected no political bias, which is refreshing in today's day and age.
If you really want to learn about oil and gas, check out "Oil 101" written by a former oil trader Morgan Downey that goes in-depth on the oil industry (like 1000 pages worth). However, it is a little out of date because the book was written before shale started taking off.
January 29, 2019
A pretty fast read; this is basically a quick primer on the current state of affairs with regards to the US' energy policy.
Quite balanced and presents facts that both support and oppose the hypothesis that the US will achieve energy independence. Was thus a fresh read after reading Peter Zeihan's The Accidental Superpower, which was hugely premised on America becoming energy-independent.
What this book provides for brevity, it loses in detail. Beyond the barrage of factoids, the book does not provide much towards insightful analysis. Also, this book will not age well; many facts presented should be rendered irrelevant in a few years. A little akin to a lengthened Foreign Affairs or NYT article. Also, the book does cite questionable sources, like blogs and Zero Hedge.
Quite balanced and presents facts that both support and oppose the hypothesis that the US will achieve energy independence. Was thus a fresh read after reading Peter Zeihan's The Accidental Superpower, which was hugely premised on America becoming energy-independent.
What this book provides for brevity, it loses in detail. Beyond the barrage of factoids, the book does not provide much towards insightful analysis. Also, this book will not age well; many facts presented should be rendered irrelevant in a few years. A little akin to a lengthened Foreign Affairs or NYT article. Also, the book does cite questionable sources, like blogs and Zero Hedge.
July 20, 2019
This is an interesting exposé on the economics and finance of fracking. It does not focus on the environmental impacts, which have received plenty of attention in other books and media reporting. McLean, who also wrote the authoritative book on the Enron scandal, focuses on the central characters who built the industry, the economics of it, and the role politics has played in it. She shares perspectives from financial analysts and industry experts, and she finishes with a look at potential future outcomes for how this development will shape the world for the next 20 years and beyond.
December 14, 2018
I really enjoyed this book. I was slightly afraid when I started it would either be way on the environmental side or way on the oil/natural gas side. I felt that in general though it was pretty unbiased and laid out the current energy status/policy in the USA. I think it confirmed my belief in the sustainable pursuit of renewable energy. I would recommend to anyone that is interested in the general energy sector.
February 8, 2019
The author writes in an enjoyable/understandable fashion a la Mary Roach (though with less sass/spunk). She seems unbiased and to have done her research. To be fair, I haven't done mine so I can't vouch for the books accuracy but it seems both useful and correct. I am looking forward to read more from the author
October 10, 2019
Excellent overview of the fracking industry and shale oil. I was fascinated and learned a lot. I'll keep referencing this book as my learning continues.
July 6, 2022
This book is ok. McLean lays out some of the basic facts we should know about fracking: it's unprofitable because it takes a lot of wells to get out the same amount of oil or gas as conventional extraction, driving costs up; it is a creature of Wall Street's desperation for profitable investments in a time of falling rates of profit (hello, Marx) and has survived on the life support of post-Recession low interest rates; it scrambles geopolitics a little by taking market share from producers like OPEC and Russia, potentially increasing the US' ability to keep global capitalism's energy flowing but also destabilizing petrostates reliant on huge patronage systems funded by oil revenues. The peeks into the social worlds of people like fracking billionaire Aubrey McClendon are interesting, though what you'd expect: lives dating and befriending heirs and heiresses of various other fortunes, attending country clubs, working and participating in Republican politics. Some of the economics are interesting here too, and we learn of little facts about how this industry has stayed alive despite its failure to turn a profit: a superstition of Wall Street that large production volumes can equate to profit eventually since at least the M-C-P-C'-M' circuit is completing, despite the primes being less than their inputs; money still getting flown in due to elaborate salesmanship and fraud; and companies sometimes surviving by selling their land with oil or gas reserves to higher bidders who think they might try their luck.
There is some other interesting political economy in here as well, and Barack Obama's administration's high degree of corporate corruption is revealed in an episode where former administration officials all line up in a hearing to testify in favor of removing the US oil export ban -- which passes under the table in an omnibus bill, in a poorly bargained exchange for some renewable tax credits. And in the final section there is an interesting comparison between China and the US on China's massive state directed renewables investments against Trump's obsession with keeping a failing coal industry alive -- a comparison that highlights the differences between a young state capitalism which strategizes its future through a whole economy lens to grow the pie (and has the economic horizon and political configuration necessary to do so) and a flailing liberal capitalism reduced to petty fights between factions of the incumbent capitalist class trying to grab their slice of the pie.
The problems with this book are mainly that it's not very deep and McLean, despite being a bit critical, is still too credulous. She seems to marvel at the figure of McClendon and finds him far more interesting than I do; she thinks it's quite amazing that even if he's a con he has conned himself into believing in his product. But I don't really. These character types are a basic feature of capitalism, you can read about a McClendon type in a 19th century novel like Zola's "Money". Their lives are really quite predictable and sad.
McClendon's other failure that struck me especially as I approached the end of the book is that she is far too inattentive to the issues of the climate crisis and the need to transition to renewables. Frankly the whole social and economic world she is describing in this book needs to be swept away as rapidly as possible so we can cut CO2 nearly in half by 2030 and down to zero by 2050. But she only describes renewables near the end of the book and seems only focused on how they replace fossil fuels on the market through price competition, and not on the urgent need for policy to rapidly force the transition. She also even suggests that natural gas could be on balance an environmental benefit -- a claim utterly disproven by studies on 'committed emissions' showing that we need to immediately stop building fossil fuel infrastructure to meet safe climate goals; not to mention the impacts of fracking like groundwater poisoning and earthquakes that she waves away early on in the book because she says others have covered them better.
It seems that in learning about her subjects, McLean has become too invested in their ways of thinking about the world -- a lesson for the rest of us on what not to do. I was considering rating two stars because of how important these issues are to me (and how important I think they are to the world), but I settled on three because the book is still quick, breezy and overall informative.
There is some other interesting political economy in here as well, and Barack Obama's administration's high degree of corporate corruption is revealed in an episode where former administration officials all line up in a hearing to testify in favor of removing the US oil export ban -- which passes under the table in an omnibus bill, in a poorly bargained exchange for some renewable tax credits. And in the final section there is an interesting comparison between China and the US on China's massive state directed renewables investments against Trump's obsession with keeping a failing coal industry alive -- a comparison that highlights the differences between a young state capitalism which strategizes its future through a whole economy lens to grow the pie (and has the economic horizon and political configuration necessary to do so) and a flailing liberal capitalism reduced to petty fights between factions of the incumbent capitalist class trying to grab their slice of the pie.
The problems with this book are mainly that it's not very deep and McLean, despite being a bit critical, is still too credulous. She seems to marvel at the figure of McClendon and finds him far more interesting than I do; she thinks it's quite amazing that even if he's a con he has conned himself into believing in his product. But I don't really. These character types are a basic feature of capitalism, you can read about a McClendon type in a 19th century novel like Zola's "Money". Their lives are really quite predictable and sad.
McClendon's other failure that struck me especially as I approached the end of the book is that she is far too inattentive to the issues of the climate crisis and the need to transition to renewables. Frankly the whole social and economic world she is describing in this book needs to be swept away as rapidly as possible so we can cut CO2 nearly in half by 2030 and down to zero by 2050. But she only describes renewables near the end of the book and seems only focused on how they replace fossil fuels on the market through price competition, and not on the urgent need for policy to rapidly force the transition. She also even suggests that natural gas could be on balance an environmental benefit -- a claim utterly disproven by studies on 'committed emissions' showing that we need to immediately stop building fossil fuel infrastructure to meet safe climate goals; not to mention the impacts of fracking like groundwater poisoning and earthquakes that she waves away early on in the book because she says others have covered them better.
It seems that in learning about her subjects, McLean has become too invested in their ways of thinking about the world -- a lesson for the rest of us on what not to do. I was considering rating two stars because of how important these issues are to me (and how important I think they are to the world), but I settled on three because the book is still quick, breezy and overall informative.
This entire review has been hidden because of spoilers.
March 20, 2021
Just because it’s short does not mean this book is easily digestible; make no mistake, there is a lot of information here. Journalist and author Bethany McLean takes a complex subject and presents it in a compelling fashion, peppered mostly with easy-to-dislike characters. From the obscenely wealthy, but heavily leveraged fracking entrepreneur Aubrey McClendon to McClendon’s political counter part, Donald Trump, as well as a myriad of Saudi kings and other boldfaced names in the worlds of oil and energy.
What stuck with me the most is the fact the Saudis plan to build a huge new city on the Red Sea powered entirely by clean, renewable energy. But they also plan to pump oil for export for another 20 years, presumably to finance their clean energy projects. The operative word here is “plan”. In contrast, the United States Congress is apparently unable to craft a far reaching energy plan today, just as they couldn’t when President Gerald Ford misguidedly lifted the ban on oil exports in the 70s. As the author says, “Fracking hasn’t been around long enough for there to be a history, and the Earth’s geology is far too complex to give itself up to easy modeling.” An entrepreneur described fracking to the author as “a big science project”. Indeed.
Well voiced by actress Sarah Mollo-Christensen.
What stuck with me the most is the fact the Saudis plan to build a huge new city on the Red Sea powered entirely by clean, renewable energy. But they also plan to pump oil for export for another 20 years, presumably to finance their clean energy projects. The operative word here is “plan”. In contrast, the United States Congress is apparently unable to craft a far reaching energy plan today, just as they couldn’t when President Gerald Ford misguidedly lifted the ban on oil exports in the 70s. As the author says, “Fracking hasn’t been around long enough for there to be a history, and the Earth’s geology is far too complex to give itself up to easy modeling.” An entrepreneur described fracking to the author as “a big science project”. Indeed.
Well voiced by actress Sarah Mollo-Christensen.
April 8, 2021
This was an entertaining well written book, giving a concise description of the fracking industry and the personality types that it tends to attract, such as Aubrey McClendon. The first half describes an erratic and eccentric McClendon, who founded Chesapeake Energy. It describes his personal and professional antics, including his salesmanship, internal optimism and willingness to take risk. He aggressively raised money, bought assets, sold dreams, borrowed money, made millions, lost millions and made millions again.
Author Bethany McClean then goes on to describe how McClendon is representative of the fracking industry of large. She describes how the industry was able to make a technological breakthrough to produce oil and gas where it wasn't thought possible. This attracted billions of dollars in financing and many entrepreneurs looking to get rich. They tend to oversell the viability of their projects, show off the early success of their wells, which leads them to develop more wells. Costs often exceed revenues at different price points, while the output of wells tend to fall dramatically over time. This was extremely interesting to read during the crisis, where oil prices went negative for the first time, and companies such as Chesapeake became non viable.
Author Bethany McClean then goes on to describe how McClendon is representative of the fracking industry of large. She describes how the industry was able to make a technological breakthrough to produce oil and gas where it wasn't thought possible. This attracted billions of dollars in financing and many entrepreneurs looking to get rich. They tend to oversell the viability of their projects, show off the early success of their wells, which leads them to develop more wells. Costs often exceed revenues at different price points, while the output of wells tend to fall dramatically over time. This was extremely interesting to read during the crisis, where oil prices went negative for the first time, and companies such as Chesapeake became non viable.
May 1, 2020
I was expecting a tome when I ordered this book and was surprised when it came in a small envelope. Don't be turned off by its brevity (133 pages). Inside is a concise description of the worldwide market for oil and the place the United States plays in it. There is considerable attention paid to fracking and the comparative cost (which is very high) to Saudi Oil. Oil is the lifeblood of the world economy, and there is no better time to become familiar with the market than in the current pandemic, where the demand for the commodity has cratered. It became so bad that producers had to pay storage facilities to take their oil. Saudi Arabia and Russia have recently been at loggerheads trying to work out production agreements that would support the price of oil without compromising their economies. An opinion piece I read in the September 3, 2018, WSJ by Bethany McLean drew me to this book. The title of the opinion piece: The Next Financial Crisis Lurks Underground: Fueled by debt and years of easy credit, America's energy boom is on shaky ground. I figured it was time to move it off my Wish List and I am glad I did.
April 29, 2020
At first, I wondered why the author chose this title for her book, because the first half gives a brief historical overview of shale oil and gas in the US but the Saudi reference is not clear. It is a short book, and can be read in a few hours, but I came away with some useful insights, for example that shale oil is much more expensive to produce than shale gas. There are a lot of accounting games played by shale companies, some don't distinguish clearly between reserves and profitable to drill reserves. And the whole industry requires massive capital, which is only financially feasible when interest rates are low.
The second part of the book is a more thoughtful and scholarly description of the geopolitics of oil production and prices, and it is here that the author excels. She cleverly weaves extracts from academic texts to explain how oil and world politics are so closely connected. America's decision to allow oil exports, Trump's love affair with coal and the future of renewables are clearly discussed.
Overall, it taught me a lot, and didn't take long to do so. Four stars.
The second part of the book is a more thoughtful and scholarly description of the geopolitics of oil production and prices, and it is here that the author excels. She cleverly weaves extracts from academic texts to explain how oil and world politics are so closely connected. America's decision to allow oil exports, Trump's love affair with coal and the future of renewables are clearly discussed.
Overall, it taught me a lot, and didn't take long to do so. Four stars.
July 9, 2018
Saudi America: The Truth about Fracking and How It's Changing the World, by Bethany McLean
In an effort to reduce its dependence on foreign energy sources, the United States oil and gas industry invested in research and technology. Aubrey McClendon began his career investing in the natural gas industry as somewhat of a superstar, but he ended it, and his life, in infamy with accusations of criminal conduct and fraud. McClendon was determined to make America a dominant figure in the energy industry and, as a byproduct, make it less dependent on foreign imports. He envisioned an America that exported energy as well as consumed it.
To further interest in the natural gas industry, McClendon demonized the coal industry as “dirty”. He was talented as a salesman and his charisma was well known. He sold a bill of goods to everyone, obtaining financing even when the ground beneath his reasoning was shaky, no pun intended, and when he was over leveraged, living large and ignoring the increasing weight of his mounting debts. He always believed he would land back on his feet in spite of all the obstacles he faced.
Was he a hero or a villain? Did he dupe the investors or was he a victim of a world situation outside of his control. He was impetuous and often acted by the seat of his pants without carefully considering the consequences. Did he ignore the warning signs of the demise of his industry, of the increases in cost which would doom him, even if temporarily? Did he not see that Putin and Russia were expanding their own opportunities? EOG, which was formerly the now defunct Enron, was becoming a major competitor after it rose like the phoenix from the dust, in much the same way that Chesapeake Oil had once risen from out of nowhere. As the oil profits from fracking rolled in and increased, the natural gas industry declined. Conspicuous consumption by those reaping the profits from both the natural gas industry and the fracking industry was widespread with their purchases of mega mansions and sports teams, among other things. Would these fortunes last? They never showed a profit. Investments in their businesses were based on a wing and a prayer.
In 2008, McClendon watched his fortunes dwindle and become debts, as the oil industry overtook his natural gas industry and shattered his dreams. He went from being high on the hog, in the black, to being in debt, in the red. He bore it well, though, as was his inclination in all things. C’est la vie. He believed that the price of gas would rise again, and this over mortgaged giant of a man thought he, too, would rise again. Ultimately, he did, but it did not last. Soon the price of gas declined again. The energy market was capricious, and competition from other sources was interfering with his market.
Meanwhile, though, the fracking industry was also suffering losses. The combination of fraudulent reporting, over indebtedness and lack of profit was a perfect storm for failure. When Opec became wary of falling prices, they realized that it was far cheaper for them to get oil out of the ground than for the frackers, but the fear of losing market share kept them from trying to manipulate the world market. Doing nothing worked better, and the price of oil that was fracked continued to weaken. For awhile, the energy industry in the United States was in decline.
On a personal level, McClendon was being investigated and was finally indicted for price rigging. Others afraid of being contaminated by associating with him threw him under the bus. He was abandoned by the top brass of the company he founded. As criminal charges and demands for financial damages assailed him, what was he thinking? On the outside, he seemed his same optimistic self, but he suffered a violent death, in an accident, which some people thought was suspicious. His life was falling apart around him, and they wondered if he took his own life. From the king of the industry, he became its pariah.
As the price of oil and gas continued to fall, so did the fortunes of many in the energy industry and some companies went bankrupt. Finally, though, when the export ban on oil was lifted, fracking became profitable and became the hope, again, of making America energy independent. Hence, the title Saudi America; the United States would produce enough to eliminate imports and perhaps provide enough to begin exporting as well as providing for the lion’s share of the country’s needs. McClendon did not see the industry’s return to solvency, and one can only hope the industry remains healthy.
Because of the author’s association with far left interests, I scrutinized her information very carefully. I wondered if she might have a political agenda in the presentation of her facts. Energy independence is to be desired, but at what price becomes the question. Will fracking make us energy independent? Will the return of the coal industry be a positive or will it increase pollution. Actually, the production of natural gas has turned out to produce more methane and not be quite so good for the environment. Our fossil fuels will one day run out., anyway, so we must develop alternatives; the current administration, she believes, and so do scholars and others in prominent positions, is not giving the problem its proper due and is squandering the resources we have by not restricting its use, and by creating a bit of chaos in the worldwide energy industries with the current energy policy.
The book is informative and raises many questions that need to be answered abut the future use and supply of energy, whether fossil fuel or renewable.
*I received this book as part of a promotion on shelf-awareness.com
In an effort to reduce its dependence on foreign energy sources, the United States oil and gas industry invested in research and technology. Aubrey McClendon began his career investing in the natural gas industry as somewhat of a superstar, but he ended it, and his life, in infamy with accusations of criminal conduct and fraud. McClendon was determined to make America a dominant figure in the energy industry and, as a byproduct, make it less dependent on foreign imports. He envisioned an America that exported energy as well as consumed it.
To further interest in the natural gas industry, McClendon demonized the coal industry as “dirty”. He was talented as a salesman and his charisma was well known. He sold a bill of goods to everyone, obtaining financing even when the ground beneath his reasoning was shaky, no pun intended, and when he was over leveraged, living large and ignoring the increasing weight of his mounting debts. He always believed he would land back on his feet in spite of all the obstacles he faced.
Was he a hero or a villain? Did he dupe the investors or was he a victim of a world situation outside of his control. He was impetuous and often acted by the seat of his pants without carefully considering the consequences. Did he ignore the warning signs of the demise of his industry, of the increases in cost which would doom him, even if temporarily? Did he not see that Putin and Russia were expanding their own opportunities? EOG, which was formerly the now defunct Enron, was becoming a major competitor after it rose like the phoenix from the dust, in much the same way that Chesapeake Oil had once risen from out of nowhere. As the oil profits from fracking rolled in and increased, the natural gas industry declined. Conspicuous consumption by those reaping the profits from both the natural gas industry and the fracking industry was widespread with their purchases of mega mansions and sports teams, among other things. Would these fortunes last? They never showed a profit. Investments in their businesses were based on a wing and a prayer.
In 2008, McClendon watched his fortunes dwindle and become debts, as the oil industry overtook his natural gas industry and shattered his dreams. He went from being high on the hog, in the black, to being in debt, in the red. He bore it well, though, as was his inclination in all things. C’est la vie. He believed that the price of gas would rise again, and this over mortgaged giant of a man thought he, too, would rise again. Ultimately, he did, but it did not last. Soon the price of gas declined again. The energy market was capricious, and competition from other sources was interfering with his market.
Meanwhile, though, the fracking industry was also suffering losses. The combination of fraudulent reporting, over indebtedness and lack of profit was a perfect storm for failure. When Opec became wary of falling prices, they realized that it was far cheaper for them to get oil out of the ground than for the frackers, but the fear of losing market share kept them from trying to manipulate the world market. Doing nothing worked better, and the price of oil that was fracked continued to weaken. For awhile, the energy industry in the United States was in decline.
On a personal level, McClendon was being investigated and was finally indicted for price rigging. Others afraid of being contaminated by associating with him threw him under the bus. He was abandoned by the top brass of the company he founded. As criminal charges and demands for financial damages assailed him, what was he thinking? On the outside, he seemed his same optimistic self, but he suffered a violent death, in an accident, which some people thought was suspicious. His life was falling apart around him, and they wondered if he took his own life. From the king of the industry, he became its pariah.
As the price of oil and gas continued to fall, so did the fortunes of many in the energy industry and some companies went bankrupt. Finally, though, when the export ban on oil was lifted, fracking became profitable and became the hope, again, of making America energy independent. Hence, the title Saudi America; the United States would produce enough to eliminate imports and perhaps provide enough to begin exporting as well as providing for the lion’s share of the country’s needs. McClendon did not see the industry’s return to solvency, and one can only hope the industry remains healthy.
Because of the author’s association with far left interests, I scrutinized her information very carefully. I wondered if she might have a political agenda in the presentation of her facts. Energy independence is to be desired, but at what price becomes the question. Will fracking make us energy independent? Will the return of the coal industry be a positive or will it increase pollution. Actually, the production of natural gas has turned out to produce more methane and not be quite so good for the environment. Our fossil fuels will one day run out., anyway, so we must develop alternatives; the current administration, she believes, and so do scholars and others in prominent positions, is not giving the problem its proper due and is squandering the resources we have by not restricting its use, and by creating a bit of chaos in the worldwide energy industries with the current energy policy.
The book is informative and raises many questions that need to be answered abut the future use and supply of energy, whether fossil fuel or renewable.
*I received this book as part of a promotion on shelf-awareness.com
Read
April 22, 2020A quick read on the economics of fracking. We hear often that renewables are not financially viable, but it turns out the oil industry also always loses money. It's only through continued investment that oil fracking companies continue to operate. The day after I finished reading this book, the price of oil went negative due to the pandemic, so it felt very timely.
Some of the most interesting sections of this book dealt with a scam artist named Aubrey McClendon who was known in investment circles for being so charming that he could get money for anything despite his history written in red ink.
Some of the most interesting sections of this book dealt with a scam artist named Aubrey McClendon who was known in investment circles for being so charming that he could get money for anything despite his history written in red ink.
October 10, 2020
- History comes in loops. At one point America dominated oil production, then OPEC, then North Sea/Alaska (and others), then America...
- When horizontal drilling was gaining maturity, old players dismissed such technological advancement - be curious when others are skeptical, be skeptical when others are delusional.
- What goes up must come down. While gas price readily climbed into 2008, it felt even faster afterwards.
- When days are good, think for when the days are bad; when days are bad, think for when the days are good.
- When horizontal drilling was gaining maturity, old players dismissed such technological advancement - be curious when others are skeptical, be skeptical when others are delusional.
- What goes up must come down. While gas price readily climbed into 2008, it felt even faster afterwards.
- When days are good, think for when the days are bad; when days are bad, think for when the days are good.
May 22, 2021
I was not a huge Sonics fan, but I did blame Howard for selling them and losing them. I listened to a podcast from Bethany about Aubrey McClendon who was the villain who took them to OK. This is a good read, Bethany tells an excellent story and it helps in understanding the business of fracking and how it created the boom, but was also typical of America, short sighted for profits and never strategic about what our country and people need. Stolen resources and idiots who think a cheap gallon of gas is what it is all about.
January 4, 2024
An solid short read on the incoherence of America's energy policy, and what it really might mean to be "energy independent." I've loved much of McLean's writing since her Enron book and while I was already interested in knowing more about fracking, her name on the cover made me pick it up and I'm glad I did.
She will also point you in the direction of some other books that will take you deeper into the science and sustainability of fracking. This text can only be a primer, and it's a good one at that.
She will also point you in the direction of some other books that will take you deeper into the science and sustainability of fracking. This text can only be a primer, and it's a good one at that.
December 8, 2020
One of the more interesting recent books on the American energy industry, albeit published in 2019 before the pandemic and the latest oil crash. If nothing else it is worth reading the Prologue and Epilogue as there are some excellent points made on how much low interest rates were the fuel behind the fracking boom, what the international geopolitical ramifications are, and why this industry has always depended on personalities.
September 21, 2024
A great insight into the fracking of gas, the importance of low cost natural gas for the US and the pricing strategies used globally by Saudi and Russia. A key takeaway being the focus on Aubrey McClendon and his risky use of junk bonds, partnerships, and future production deals, creating a high leverage to cause a boom in the fracking industry.
May 17, 2020
America is now a significant producer of oil from fracking, but they havent done it economically and a few have gotten rich while they deplete the hydrocarbons whilst they should probably be saving them.
June 28, 2020
This is a "mini-book" as described by the author. It is a quick overview of the absurd fracking industry and the billions of dollars lost in its supposed development. A must read to understand the true story behind the industry.
March 29, 2021
A quick primer
A short book detailing the rise of fracking in the US. The book is pessimistic that the fracking boom will continue, given it’s been driven by cheap capital that has resulted in uneconomic wells thy deplete quickly.
A short book detailing the rise of fracking in the US. The book is pessimistic that the fracking boom will continue, given it’s been driven by cheap capital that has resulted in uneconomic wells thy deplete quickly.
August 29, 2021
Pretty good book. Short, sweet and to the point. Focuses on the trend of turning junk bonds in to high cost oil and how low interest rates+relatively high cost oil have driven wave of fracking in America.
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