Shady Economics

by Jim Emberger, NBASGA

I’m here to talk about the economic case for shale gas, which I have subtitled, “Oh what a tangled web we weave when first we practice to deceive.

banner_economicsThe economic case works like this – First, get your friends in government to kill the rules requiring you to have reasonable proof of the potential gas reserves that you quote to investors. It’s a much easier sell if you can just make them up. Once hooked keep the investors enthusiastic by issuing equally misleading figures about well production and life span.

Secondly, have your friends in government exempt you from health and safety regulations, thus avoiding expensive safeguards, which if added to the already expensive process of hydrofracking would make shale gas unprofitable. In NB, that means getting your friends in government to gut the legislation covering wetlands, river classification, and clean air.

Third, sell the entire concept as a job creating enterprise, a free-lunch royalty source for governments, and as an environmentally friendly, lower carbon emissions fuel.

Alas, even the cleverest business plans and ad campaigns eventually have to face

Geologists slashed the claims about the size of gas plays.

Auditors looking at actual well records slashed the advertised amount of gas being produced, and noted that most shale gas is produced in the first year or two of a well’s life.

Doctors pointed out rising health concerns, and regulators and citizens documented shale gas’ continuing history of well failures and contamination of air and water.

jobs2013slideEconomists cited evidence that the shale industry creates fewer jobs than does investment in alternative energy, and they noted that areas without shale development are doing better economically than their neighboring jurisdictions that have it.

Government budget officers noticed that royalties are not the free-lunch that they expected. British Columbia’s shale gas based budget now has a $1 billion dollar hole in it from slumping royalties. Texas faces a $2 billion dollar unfunded bill for road repair damage caused by the industry.

NB gets gas royalties too, from 30 plus gas wells run by Corridor Resources. In 2012 we received zero dollars.

Essentially, every economic factor for developing shale gas is a lie or is based on a lie. It is incredible that we are still here today arguing about it.

Even if all the above wasn’t true, there is still this: scientists have shown that methane emissions from the shale gas lifecycle are at least twice industry estimates. Methane has a greater effect on climate change than CO2, thus making it worse than coal.

Last week, the UN Environmental Program reported that without immediate and drastic action to reduce emissions, we will experience the worst-case scenario – catastrophic and possibly runaway climate change – much sooner than forecast.

This is no surprise coming from scientists. But the financial institution, the World Bank, and global business accounting advisors, PriceWaterhouseCooper, both issued similar warnings based on their own research, thus joining the insurance industry, and much of the world’s military, in defining climate change as the number one threat facing the world.

So Mr. Alward and PC legislators, can you tell us exactly what is the economic case for destroying the planet?