The last couple of years have been thrilling for the Natural Gas business. The single most exciting reversal was the US becoming a potential gas exporter after having enjoyed its position of the future biggest importer of LNG for many years. All that comes because a low yield and really very unlikely resource played havoc with the market – shale gas.
The rest is history by now. The US enjoys a new investment and energy boom because of its massive shale industry and everyone is happy but let’s pause for a minute. Is this a good thing for them?
How can this be a bad thing you will say? Cheap energy, billions in investments in energy-hungry industries, millions of new jobs and an end to the economic crisis. This clearly is not a bad thing. Or is it?
All those expecting me to lash out on fracking because it makes honey bees less fertile and hence lowers honey yield for Alaskan farmers – sorry guys. Most of the arguments against fracking are exactly like my little example – a bit funny at the very best.
No – I direct my gaze at the US as a whole. As a country, an economic machine able to put bread and butter on the average citizens table and afford him a warm home in order to raise his offspring. Because that’s what really matters. It’s jobs, its houses, its peanut butter sandwiches, its mortgages, its …
The US – just like most of the rest of the world – was stuck in quagmire until very recently. Some still call it the biggest economic crisis for almost a century. The economic crisis – which had taken its first big bites in 2008 – showed no sign of weakening and the country looked depressed. Industries were in doldrums and jobs disappeared by the thousands every day. It was not the brightest day for the American people.
But so it is for many other people of the world whose countries are still stuck in the quagmire. They sure are looking towards the US to lift them out of it.
A crisis – or whatever else you like to call it – is not easily enjoyed. How can you enjoy something so bad, so negative? Well, in a sense this is possible. And you don’t have to be overly masochistic in nature.
Because most economic calamities change nature when a different prism is used to shine the light on it. One man’s toxic sludge is another man’s potpourri.
A crisis can be seen as some sort of immune reaction by the underlying economy to deal with the nasty effects of something that is fundamentally wrong. The crisis causes pain but only this pain will make people and even countries change what needs to be changed. We don’t like change. We loath it. Some say we would rather die than changing something. Because we trust the crap we know much better than something potentially much better we don’t know.
So if it’s only pain that gives us the jolt we need in order to fix a problem – then pain is something fundamentally positive. Because dished out in bearable doses it makes you fix the machine every time something is wrong. Bigger calamities are avoided like this.
If calamities get bigger, then consequently they are the result of a lot of efforts to cover up the pain. Stashing up debt is such a pain reliever. Because spending money one does not own lets the country go on with its old, nasty ways for another while.
The earlier that corrective mechanism – let’s call it the pain factor sets it – the easier it is to handle the crisis and the earlier we all can go back to normal again. The later it is applied because of any outside influencer, the worse its going to get.
We all need to reform our economic systems, slim bloated administrations, modernize our welfare systems, reform our schools, you name it from time to time.
But instead of attacking the ugly beast, America is basking in the glory of its massive shale gas industry that has put the country back on its feet. Massive investment pours into the country, jobs are created by the hundred thousands, whole industries relocate to the US which they had left decades earlier. Besides, the air gets cleaner because of all the carbon reductions through the use of Natural Gas and America is on the verge of energy independence. The current stalemate on the debt ceiling cannot really put a dent into those rosy prospects.
All that money, growth, and jobs are masking the fact that America still needs reform as the causes for the original crisis have not been taken care of yet. We are still in the middle of it. Shale gas acts as some form of giant pain reliever which also blunts the willingness to do what needs to be done.
Don’t get me wrong. I am a big shale gas fan. I am convinced that its doing more good to the country than a whole bunch of well meant green measures plus ten economic stimuli taken together. What can be wrong with putting money in people’s pockets and offering them a chance to live a decent life?
The global effects of shale cannot be underestimated. What else has gotten Saudi princes so worried about their countries futures? What else has ever put a dent into the prospects of the Gazprom’s of the planet before? Sellers of oil and gas start to see the mess they are faced with. Their wares are just too expensive and the world has found a way to shun them and go for an alternative. It has ended this unbearable situation where sellers of hydrocarbons could make large industrial nations accept their every excess.
Shale gas has done a lot of good to this planet and will no doubt do much more.
But America needs to fix its addiction to easy money and the current crisis could have been the best thing happening to the country in a long while for its curative properties. It’s going to be blunted by the shale gas boom as this puts new easy money at the fingertips of politicians. And that will make their will for painful reform evaporate like LNG dripping on a hot rock.
That’s a shame as the country of infinite opportunities, the country of the free roaming entrepreneur should cut the tape and become what it was to my generation. A beacon of opportunity and freedom. Mountains of debt on its shoulders will not make it nimble and easy money from shale will not put it back in shape. So it might well remain the couch potatoe it had become. A pity.