Photo credit: ProgressOhio via Flickr/CC BY
The New York Times on Sunday published an explosive investigation into the natural gas industry that revealed the industry is consistently overselling the amount of natural gas deposits available, hurting investors and misleading the public. The reporter, Ian Urbina, collected over 10,000 emails from investors and gas industry representatives that showed that the gap between the industry's rosy talk and reality is wider than previously recognized.
"Money is pouring in" from investors even though shale gas is "inherently unprofitable," an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. "Reminds you of dot-coms."
"The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work," an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009.
The story is yet another black eye for the natural gas sector, which in recent months has experienced the popularity of the film Gasland; anti-fracking rallies led by celebrities such as Mark Ruffalo and Ethan Hawke; new regulations in Texas; and now this damning article.
It's easy to see how a similar piece could have been written before the financial crisis, which was caused by reckless promotion and bad practices in the housing sector. The natural gas industry appears to be following a similar playbook: corrupt public officials into passing bad policy, offer false promises to the public, and make as much as quickly as possible.