This Summer, I wrote a Throw Away Diary "Fracking F&*King Balance Sheets
Amongst low end diaries, it was a low end diary, but, i guess there was something in it, Tim Meteor Blades Lang picked it up for the Green Diary.
Where I said
When people raved about how it's wrecking the environment (It is)
I said it will end.
When people raved about how it's the miracle energy (It isn't)
I said it will end.
When people worried about if it was causing earthquakes (it does)
I said it will end.
When people said it was leaking greenhouse gasses,
I said it would end
Well Now one of Wall Street's Legends is writing about the Fracking Scam.
I've written several times about Fracking
http://www.dailykos.com/...
The others are not available, but i've disliked Fracking as a scam, ever since i met
the people pushing it.
Well Jeremy Grantham
Jeremy Grantham is a British investor and co-founder and chief investment strategist of Grantham Mayo van Otterloo (GMO), a Boston-based asset management firm. GMO is one of the largest managers of such funds in the world, having more than US $112 billion in assets under management as of September 2013.[1] Grantham is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles.[2] He has been a vocal critic of various governmental responses to the Global Financial Crisis.[3][4] Grantham started one of the world's first index funds in the early 1970s.
Grantham has repeatedly stated that the rising cost of energy - the most fundamental commodity - between 2002 and 2008 has falsely inflated economic growth and GDP figures worldwide and that we have been in a "carbon bubble" for approximately the last 250 years in which energy was very cheap. He believes that this bubble is coming to an end. He has stated his opposition to the Keystone Pipeline on the basis of the ruinous environmental consequences that its construction will bring to Alberta and to the entire planet due to the contribution that burning the extracted oil would make to climate change.[2][10]
He's been writing about Fracking as a disaster
http://www.gmo.com/...
U.S. Fracking: the Largest Red Herring in the History of Oil
It has not prevented the underlying costs of traditional oil from continuing to rise rapidly or the cash flow available to oil-producing countries like Saudi Arabia, Iran, and especially Venezuela from getting squeezed from both ends (rising costs and falling prices) with potential political consequences that I will leave to others to speculate about. The same pressures will of course also expose those oil operators that have been borrowing amounts close to the total of their cash flows for, strangely indeed, the fracking sub industry in total does not clearly show much positive cash flow despite considerably
higher prices over the last two years than exist today. Yes, they have been drilling more wells that chew up money, but not that many more, and good operations have lowered the costs per well by over a third. On the GMO Quarterly Letter – Third Quarter 2014 16 other hand, they have drilled, as always the best parts of the best fields first, and because the first two years of flow are basically all we get in fracking, we should have expected considerably better financial results by now. The aggregate financial results allow for the possibility that fracking costs have been underestimated by corporations and understated in the press.
that last bit is a very harsh criticism by a wall streeter.
it's essentially accusing them of scamming the accounts.
i've hated Fracking for years, because, i saw crappy cash flows from the wells.
Earnings are an opinion, cash flow is a reality.
Grantham has some other interesting pieces
The Immovable Object and the Irresistible Force
What I’m trying to describe here is on one hand a remorseless and historically unprecedented rise in the costs of delivering oil to the marketplace, which is sapping economic strength globally, and on the other hand (and simultaneously) what will be the beginning of an accelerating transference of demand away from oil under the
impact of surprising technological progress in alternative energy. When we add the further complexity of a temporary surge in oil from U.S. fracking, I am willing to concede that the outlook for oil and energy is the most complicated puzzle I have ever come across: it is wheels within wheels, but with each spinning in a different time frame. As Spock would say, “Fascinating!” How this ultra-complicated tug of war plays out in the next 10
years or so is anyone’s guess. My guess is that oil prices will bounce around for most or all of the next 10 to 15 years as first one side of this tug of war moves ahead and then the other, with perhaps another 2008-type spike (or two) in the price of oil, after which prices will plateau and decline as electric vehicles take over and, one by
one, oil’s remaining uses are slowly replaced.
and
“There is no reason to believe that the democratic decision made by the living in
the face of their present needs and desires will be the decision that would maximize
the chance of long-term system survival. The unpleasant conclusion is that it is
possible for a society to choose economic collapse.” James Galbraith
When a guy like Grantham is now openly calling out the Frackers, they will have to flee wall street and aim for Late Night TV Infomercials and cold calling guys like me.
It will be very interesting seeing the studied silence from the people who screamed about Fracking for so long, particularly guys like Dick Cheney who got the Halliburton loophole in.