Guest Post By James Howard Kunstler
The collective state of mind in the USA these days may be even more peculiar than what went on in Germany in the early 1930s,
when the Nazis were freely elected to lead the country and reconstructed the battered national psyche into a superman cult that soon beat a path to mass death and ruin.
America has its own way of going crazy. We don't goose-step to tragedy; we coalesce into an insane clown posse and stumble into it by pratfall -- juggaloes dancing backwards off the cliff edge.
We've been softened up and made extra-stupid on a 60-year-long diet of TV and kreme-filled donuts.
Instead of a "master race," our political fantasies revolve around a
master wish - to get something for nothing. Want to feel good about
yourself? Smoke some crank. Want to become economically secure? Buy a
Powerball ticket or drive to the local casino. Want political esteem?
Plug a flag pin into your lapel. Want status? Borrow free money
from the Federal Reserve at zero interest and arbitrage it into massive
earnings for your primary dealer bank. All these behaviors are
the consequence of a culture that elevated advertising to such a high
social good, it ended up drowning in its own manufactured bullshit.
A subset of our master wish has been on vivid display in recent
months, namely the idea that God has blessed the USA with a limitless
supply of new oil that will allow us to keep driving to WalMart forever.
This propaganda from an oil industry desperate for capital
investment has been swallowed whole by people in authority who ought to
know better, just as that same class of people in Germany of
1934 should have known better about what they were bargaining for in
economic well-being with the Nazi agenda. In our case, the propaganda
drumbeat is being led by formerly respectable news organizations. The New York Times, National Public Radio, Bloomberg News, Forbes, and The Atlantic Magazine
are media giants that have lately spread the "good news" that America
will soon be 1) "energy independent," 2) the world's leading oil
exporter (greater than Saudi Arabia is now!), and the "go-to nation" for
cheap manufacturing.
All of these claims are false, by the way. The
American way-of-life was designed to run on $20-a-barrel oil, not
$90-a-barrel oil, and "new technology" has not changed that. The
unfortunate and, to some extent, mendacious memes about the wonders of
"new technology" have only snookered the public into a false sense of
security about a future that will disappoint them badly and probably
provoke an extreme political reaction as the reality of our predicament
sweeps through daily life.
Most of the current "endless oil" fantasy revolves around shale oil. Just
to get a visual idea of what this amounts to, consider this map. It
depicts the two major shale oil production regions of the USA: the
Bakken in North Dakota and the Eagle Ford "play" in Texas. Bakken
production is confined almost entirely to four counties in North Dakota
(Williams, Mountrail, McKenzie, Dunn). The Eagle Ford region touches
perhaps ten Texas counties. Now, realize that the oil fields all over
the rest of the USA (including Alaska) are in decline. Here's where the
"bonanza" of new oil all comes from:
The oil coming out of these places is high cost and low flow-rate oil. This
is exactly the opposite of what US oil production used to be (low cost
and high flow-rate) when we were busy building all the freeways, strip
malls, housing subdivisions, suburban office parks and all of the other
stranded assets that now make up the infrastructure of daily life in
this country. Those were the days when you could pound a single pipe
vertically 1000 feet down (not much deeper than many home water wells)
into the temperate wheatfields of Oklahoma (drive to work in shirtsleeve
weather!) and after that modest investment in drilling you could kick
back and depend on a great flow rate (5,000 barrels-a-day, not unusual)
of sweet light petroleum for years.
Horizontal drilling (often more than 10,000 feet down + many
"laterals" an additional 10,000 feet horizontally) and then fracturing
"tight" rock for shale oil is not only a way larger capital expense
(lots of steel!) but the flow rates per well (82 barrels-a-day average)
are laughable compared to the halcyon days of conventional oil -- little
better than "stripper" wells. Consider also that shale oil well
flow-rates decline greater than 60 percent in the first year (rapidly
thereafter, too) and you can see easily that there will be no "kicking
back" to run the pump-jacks like cash registers, as in the old days. In
fact, the rapid depletion only prompts more frantic drilling and
re-drilling to keep the production at its current rate - the "Red Queen
Syndrome" ("I'm running as fast as I can to stay where I am"),
which means fantastic capital expenditure to keep drilling and fracking
more wells (even more steel!). Consider also, that the small "sweet
spots" in the shale oil regions were the ones drilled first (in earnest
after 2003), for the simple reason that they were the most promising.
This was the "low hanging fruit" -- easy to pick. Outside these sweet
spots the oil may be too meager or difficult or costly to bother
drilling for.
This is a picture of a boomlet that may run a few more
years -- if the banking system doesn't implode and the massive stream of
capital doesn't quit flowing to the shale counties. The
excitement will all be over before 2020, but I suspect that troubles in
finance and banking will put the schnitz on the shale gas mania long
before that date. What will happen when the American public discovers
that they were lied to about yet another important matter? The discovery
will coincide with very severe changes in daily life that won't be
avoidable. Everyone will be affected. Many will be impoverished and
suffer real hardship. That's when the public goes apeshit and starts
tearing down the house.
Apart from the issue of sheer economic suffering and all
the damage that will ensue, consider that it will be generations before
anyone believes the "authorities" again -- though, like the oil
age itself, the era of giant national media will probably prove to be a
one-shot deal, too. Future generations -- if they are lucky -- may read
the news on one-page circulating broadsides, printed laboriously in
hand-set type by letterpress. Or maybe they'll be reduced to just
parsing out rumors.
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