Shale Oil Revolution A Symptom Of Broken Energy Policy

Maybe. Or maybe not. 

First we’d have to know how much there is (i.e., the resources) and where we hope to be when it runs out (the vision). If there’s enough to fund both our future visions and export some, too, then OK, go ahead and export it.

The problem, as you know, is that the US has no clear vision for where it would like to be in 20 or 30 years.

If the future is going to be mostly electrified, then there are huge energy expenditures to be made in alternative electricity production and storage, build-out of electric vehicles and mass transit systems, and a complete overhaul of the agricultural system.

I would propose that the energy cost (not the dollar cost) of all that activity is largely unknown. Which means that the US is running the risk of wasting this last bonanza from the shale revolution on frivolous pursuits. 

If the WSJ analysis is right (and they did not consult with any of the experts I trust on the matter) then there’s around 10% less oil in the shale plays than we thought.Not great, but survivable.

If the analyses I trust are more accurate, then there’s closer to only 50% of what we thought was there. This is a big problem for a nation without any sort of a plan, especially one that has used the shale output to convince itself that oil abundance is always going to be a part of the landscape.

Beyond the significance of not having an energy strategy, there’s the more immediate predicament of how a nation up to its armpits in debt, and sinking rapidly, is going to fare when the great output boom stops and then heads into reverse.

High levels of debt and rising energy costs are a terrible combination. 

We’re placing that collision within the next three years.Are you prepared for that?

As things stand, the US will blunder into that new era completely unprepared, as one might expect for a nation in decline.

In Part 2: A Bust For The Ages, we dive much further into the path and scope of the coming shale yield shortfall, and detail just how devastating it will be for both government, industry and individuals alike given the massive dependency on current assumptions.

If future output disappoints even by a little, the cascade of ripple effects across the economy as that becomes understood will be extremely painful. But the math clearly shows volumes will disappoint by a lot -- so get ready for a bust for the ages.

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