{"id":37350,"date":"2018-09-04T18:16:40","date_gmt":"2018-09-04T23:16:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37350"},"modified":"2018-09-04T18:16:40","modified_gmt":"2018-09-04T23:16:40","slug":"no-fracking-way-debt-laden-shale-producers-may-unleash-the-next-financial-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37350","title":{"rendered":"No Fracking Way: Debt-Laden Shale Producers\u00a0May Unleash\u00a0The Next Financial Crisis"},"content":{"rendered":"
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No Fracking Way: Debt-Laden Shale Producers\u00a0May Unleash\u00a0The Next Financial Crisis<\/span><\/a><\/h3>\n<\/div>\n
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After nearly two decades of horizontal drilling, fracking – as it is commonly known, has “turned the energy world upside down,” according to Journalist Bethany McLean, a former Goldman Sachs analyst-turned-journalist.<\/p>\n

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And according to a new\u00a0op-ed in the\u00a0New York Time<\/em>s<\/em><\/a>, McLean has a warning for anyone betting the farm on the shale industry;\u00a0beware<\/em><\/u>.<\/p>\n

In a nutshell, the fracking industry – which “could not have taken off so dramatically were it not for record low interest rates after the 2008 financial crisis,”\u00a0is setting up for a spectacular fall without rising oil prices and global demand. Fracking companies have largely survived, according to McLean, because “plenty of people on Wall Street are willing to keep feeding them capital and taking their fees<\/strong>.”<\/p>\n

From 2001 to 2012, Chesapeake Energy, a pioneering fracking firm, sold $16.4 billion of stock and $15.5 billion of debt, and paid Wall Street more than $1.1 billion in fees<\/strong>, according to Thomson Reuters Deals Intelligence. That\u2019s what was public. In less obvious ways, Chesapeake raised at least another $30 billion by selling assets and doing Enron-esque deals in which the company got what were, in effect, loans repaid with future sales of natural gas.<\/p>\n

But Chesapeake bled cash. From 2002 to the end of 2012, Chesapeake never managed to report positive free cash flow<\/strong>, before asset sales. –NYT<\/a><\/p><\/blockquote>\n

Columbia University Center on Global Energy Policy fellow, Amir Azar, calculates that the fracking industry’s net debt in 2015 was $200 billion,\u00a0a 300% increase from a decade earlier<\/strong>, however interest expense increased at half the rate debt did due to falling interest rates.<\/p>\n

Dr. Azar recently called the post-2008 era of super-low interest rates the \u201creal catalyst of the shale revolution.\u201d<\/strong>\u00a0–NYT<\/a><\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

No Fracking Way: Debt-Laden Shale Producers\u00a0May Unleash\u00a0The Next Financial Crisis After nearly two decades of horizontal drilling, fracking – as it is commonly known, has “turned the energy world upside down,” according to Journalist Bethany McLean, a former Goldman Sachs analyst-turned-journalist. And according to a new\u00a0op-ed in the\u00a0New York Times, McLean has a warning for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[21521,21520,7453,195,312,331,1466,431,1921,846],"class_list":["post-37350","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-amir-azar","tag-bethany-mclean","tag-chesapeake-energy","tag-debt","tag-financial-crisis","tag-fracking","tag-fracking-industry","tag-interest-rates","tag-new-york-times","tag-us-shale-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37350"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37350\/revisions"}],"predecessor-version":[{"id":37351,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37350\/revisions\/37351"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}