Obama Gives Fracturing the Green Light

It’s a story that’s been advancing in the headlines for months.

From Greenpeace to the Sierra Club; from New York Senator Adriano Espaillat to a host of 1% crusaders like Debra Winger, Bill Maher, and Keith Olbermann; and most recently, to an OWS offshoot dubbed “Occupy Well Street”…

Everyone leaning strongly against fossil fuel exploration has sounded off on the topic of hydraulic fracturing, known now to popular culture simply as fracking.

Lately, fracking has been such a hot-button topic that a whole subindustry of tee shirts and bumper stickers featuring catchy slogans like “No fracking way,” “Shut the frack up,” and “Frack off” has risen…

Such propaganda strives to sell the idea that this 60-year-old method for recovering oil and gas from rock strata is dangerous — both to people and the environment.

Armed with a long and diverse list of dark, frightening scenarios such as artificially-triggered earthquakes, hyper-accelerated global warming, and multi-billion-dollar oil industry conspiracies, the protests have never suffered from a lack of subject matter.

Most recently, anti-fracking groups have denounced the process for the alleged risk it poses to groundwater from fracking fluid contamination.

However, it seems as though their best and biggest potential ally — the Federal Government’s own environmental watchdog, the EPA — has turned its back on the picket signs…

At a New Jersey energy conference last week, EPA Administrator Lisa Jackson stated that she saw: “only an upside to hydraulic fracturing,” and that the process was: “perfectly capable of being clean.”

This came less than a month after Obama’s State of the Union address for 2012 made clear the president’s intention to put the non-traditional recovery method to full use — not just for the sake of long-term energy independence, but also for the more pressing issue of American industrial productivity and labor.

“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy,” Obama said in his January 24th speech, adding that fracking “could create more than 600,000 jobs by the end of the decade.”

(I wonder what the people who attended the Government Doesn’t Suck rally think now.)

To most political analysts and oil industry insiders, these policy changes shouldn’t come as a great shock.

As renewable energy sources such as wind and solar continue to fight what seems to be a losing battle against cheap gas, what may have been a darling of a presidential campaign platform during times of “hope and change” has become a liability as we head into the first post-recession election season.

If you doubt this, just ask the shareholders of North American solar companies…

Two days ago First Solar, America’s largest solar company, reported its second quarter numbers. Even the company’s most avid supporters and analysts ran for cover, calling it “a downright disaster.” 

Some suggest First Solar’s true valuation needs to drop two-thirds from its current market cap. That would add some serious salt to the wound, as First Solar’s stock was already down a bone-crushing 75% in 2011… and still, there are some who say First Solar won’t even make it.

If you think I’m exaggerating, watch this CNBC interview.

While the liberals and conservatives can’t seem to agree on anything, the need for a stronger, more dynamic, more innovative domestic fossil fuel industry seems to be a universal truth on both sides of the political spectrum…

With foreign oil sources slowly but surely drying up — and as much as 2.1 trillion barrels of American crude now accessible through non-traditional recovery methods such as fracking — the reason for this seemingly unusual harmony between the parties isn’t too hard to pin down.

The potential benefits are too big — and too important — to turn this into one of those fair-weather political issues that a presidential candidate simply adopts or decries for the sake of an election.

Thanks to a wholehearted endorsement from the POTUS and the EPA’s quickness to fall in line, it seems no matter who’s in the Oval Office a year from now, the future of American oil and gas will be guaranteed for at least another term…

According to a recent report published by PIMCO explaining why natural gas in the U.S. is a game-changer:

First, it’s lowering costs. Onshore shale natural gas production has surged in areas like Marcellus, Haynesville, Fayetteville and Barnett formations. Natural gas output has increased to 22.7 trillion cubic feet (tcf) in October 2011, from 20.2 tcf in December 2007. This has helped push down nat gas prices, and is expected to lower heating costs in the future.

Moreover, this will also make the U.S. less energy reliant. Nat gas imports have fallen to 1.7 tcf today, from 4 tcf in 2008. U.S. natural gas prices are also cheaper relative to international prices.

Second, U.S. annual upstream (exploration, recovery and production) and infrastructure capital expenditure on shale gas is projected to grow to $48.7 billion in 2015, from $33.3 billion in 2010.

This is expected to increase “direct, indirect and induced” employment in shale gas to 869,684 employees in 2015, from 601,348 employees in 2010. Moreover, employment and private sector business investment in industries like fertilizer, chemicals, manufacturing, etc., is expected to increase. Kiesel says investment by chemical companies in the Gulf Coast is recovering and manufacturing plants are returning to the Midwest to take advantage of low natural gas prices.

The upshot seems to be that the U.S. could overtake Russia to become the world’s biggest energy producer in the next 10 years if it continues to boost natural gas and oil production.

And this is only half the story.

As you know, I’ve been beating the drum about employment in the United States.

My thesis is simple: To lower unemployment and to decrease the tax revenue stress state and local governments are experiencing, open up the gas and oil shale formations for further drilling.

Look at Washington County in southwestern Pennsylvania, for example.

It has been named the third highest county in the country in job growth, due mostly to Marcellus Shale drilling and hydraulic fracturing. Not only that, but residents have seen an average increase of 8.8 percent in their wages…

According to the Pittsburgh Post-Gazette:

Described as “unequaled in job growth” in southwestern Pennsylvania and as “the epicenter of this region’s growth,” Washington County has shrugged off the nation’s sluggish economy in recent years, mostly due to the surge of the Marcellus Shale.

That was the message county commissioners projected last week at a news conference, where they announced that the county had been named third highest in the nation in job growth and saw investments totaling $279 million in public and private development projects during the past five years.

“Washington County’s economy continues to expand and outperform the southwestern Pennsylvania region in terms of both economic development projects and job creation…”

The local employment data, provided by the U.S. Department of Labor and Labor Statistics, showed a job growth rate of 4.3 percent, Mr. Maggi said, translating into about 750 new workers in the energy sector and another 900 new jobs in the professional services and business industries.

“Our residents have seen an increase of 8.8 percent in their average weekly wages as well,” Mr. Maggi said.

So now you know that hydraulic fracturing has the power to harvest what could be by far the world’s biggest oil reserve — and do so within our own borders.

And you know that the Federal Government stands behind it today, and will continue to do so in the future.

The next step is putting this knowledge to work for you.

Energy Investor editor and world authority on hydraulic fracturing Keith Kohl has spent the last several months working on a project that’s been waiting for a moment just like this…

He’s sifted through thousands of documents detailing production values, profitability, and future expansion plans of hundreds of oil companies involved in fracking operations throughout North America.

He’s spoken with geologists, met with technicians in the field, and after countless hours of checking and rechecking his facts, he’s zeroed in on the three best firms doing business today…

These are the future giants of North American oil and gas — and they’re all located in the lower 48, operating in the heart of America’s Bakken super-formation.

This three-pronged investment plan has years of growth ahead of it… but you’ll want to get in on the ground floor of this opportunity right now.

The original bull on America,

Brian Hicks

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Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.