Optimism is the conspiracy of the oil and gas sector. Let's be clear, about that.

 July 22, 2022

Optimism is the conspiracy of the oil and gas sector. Let's be clear, about that.

There's a fairly recent report about this. Employment in the Texas oil and gas sector has been sharply decreasing in the past year, and has "declined over the last two boom and bust cycles for oil prices".

Meanwhile, Texas non-farm employment, and alternative energy employment has increased. The Texas fuel sector was the only sector that lost jobs over the year 2021.

Of course, let's apply some common sense to this beyond the charts and graphs in the cognitive dissonance associated with this issue. What's really going on in this sector has a lot more to do with stuff you might've heard of, more than complex economic analysis. For a long time, they've been trying to develop "fracking" techniques. To "unconventionally" extract what they are calling "tight oil" and so on, has proved to be not cost-effective, and it comes with all sorts of collateral damage to the environment.

So to put this in common terms, they set up all these fracking operations, quite a few on private land, and farmers and ranchers included, and basically not been able to make a profit on it. This is so funny, that they've got the East Coast bankers involved, because there's nothing that East Coast investment community loves more than quixotic operations that are hemorrhaging money all over the place. The farmers, are of course OK for now because they're being paid through property leases and so on for the most part, but it's too often happens, the grift of this fracking scheme as a whole is that the farmers will take the final and most brutal blow when the industry just can't make it work and closes off the drilling wells, in one way or another. The fact that farmers are accepting the risk of contamination to their lands just makes this all the more macabre.

All this is not to mention that the fracked gas infrastructure is not safe. Gas pipelines are known to explode and catch fire, as one in Texas recently actually dead. Firefighters spent two hours trying to put out the fire, and couldn't put it out until the flow gas was shut off.

The wide view of this situation is that most of the easily-accessible oil and gas reserves have already been exploited and the only action left in the market are these hard-to-get oil and gas resources. They're having the same problems making a profit on tar sands oil. Most of the operators in tar sands and in fracking are accepting debt to continue operating, essentially betting on the hapless scientists and engineers they've got to "get it together" and tell them how to profitably extract the tar sands oil and fracked gas. The oil and gas industry has had to desperately assure those East Coast investment guys breathing down their necks that they're "keenly focused on driving down their unit costs," which is what people in a market often say, rather than admit that they just got a hold of a bad idea. Those who are "doing OK" in that part of the oil and gas sector are shielded in some way by complex financial instruments. 

The long view is accessible by common sense if you care to know. Of course, oil and gas is a finite resource. Those in the employ, or under the influence of, the oil and gas sector who say they'll extract every drop of oil and every whiff of gas from the earth and oil and gas will be around forever are just exposing the delusional optimism that undergirds the oil and gas sector. This is a conspiracy of short-term memory loss. Let's just be honest about it: the oil and gas sector couldn't go on making a profit unless they constantly project an aura of optimism. If they didn't say on and on, over and over again, that they are optimistic about "the next one", whatever that "one" is, they'd be over.

It's just harder and harder to believe that. The next time I put out my solar panel, I'll be thinking about this, probably a little. But I'll level with you, it's hard to get into the habit of using one of those solar panels, because oil and gas is the habit we have. It's worth it to get into new ones. ¯\(ツ)/¯