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
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
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:
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.
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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