John Chuckman
COMMENT POSTED TO AN ARTICLE IN CHECKPOINT ASIA
“Putin Says Humanity Will End Up in Caves If It Abandons Oil and Nuclear
“The Russian energy balance is one of the greenest in the world due to the use of hydropower, nuclear energy and gas generation, Putin added, before going on to extol the value of traditional forms of fossil fuels”
"https://www.checkpointasia.net/putin-says-humanity-will-end-up-in-caves-if-it-abandons-oil-and-nuclear/#disqus_thread"
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Response to a comment saying, “Guess which country has based its totalitarian vision of establishing global energy dominance on the fracking of shale oil?”
Indeed.
And costs for shale oil are considerably higher than those for conventional production.
Producers can make only a fraction of what some other producers make.
The industry is capital-intensive, having done a lot of heavy borrowing to carry on to this point.
It requires a great deal of drilling into rock formations and the high-pressure injection of water and chemicals, apart from collection systems.
It needs good prices to recoup its costs.
But world prices are rather soft, and it's hard to see them climbing seriously for a long time.
Contributing to soft prices are a number of factors.
Weakening world economies, and plenty of analysts expect only more of the same, perhaps much more.
A surfeit of available oil supply, only artificially removed from markets by OPEC-Russian agreement. America’s illegal sanctions all over have also artificially reduced supplies, as with Iran and Venezuela. A return to political normality would restore these supplies to the market quickly.
We might well see growing failures in the shale oil industry as companies are unable to repay their debt.
Last, there are serious ecological problems around shale oil production.
The very process, fracturing formations and injecting chemicals, is increasingly viewed as a hazard to ground water.
It is also now is pretty well confirmed to cause at least minor earthquakes, and it has been banned for that reason in some jurisdictions.
Big new discoveries in conventional crude have been made recently, too. Iran, for example, has discovered a monster field. Russia is working overtime on its North Polar projects.
But America’s Beverly Hillbillies President thinks it’s all just great. His emotional and uninformed views here resemble those he has of so many important matters, as the workings of world trade and the deleterious effects of tariffs and sanctions and threats.
