Fracking is all over the news today. Some people think it's brand new but its actually been used in the oil & gas industry for a long time, 50 years or so. But like many operations it has changed quite a bit over time.
Fracking is now being done on a much wider scale and in new places and that's a big reason it has gained so much attention. It's important, though, to take a wider perspective to understand why we should care about it. The key point is that the US is in the midst of a tremendous energy renaissance. Huge quantities of unconventional US shale gas are now commercially viable. This is in addition to enhancements in extracting oil. Both of these produce a sense of energy independence that was almost unimaginable a generation ago.
These developments change the strategic picture for the US with global implications. For example, US imports of natural gas and crude oil have fallen significantly, narrowing the trade deficit. The US is overtaking Russia as the world's largest producer of oil and natural gas. This is a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations.The presence of abundant energy has also fueled a manufacturing boom in the US. Many industries, such as chemical and plastics companies that use a lot of energy, are expanding in the US and bring operations back from overseas. This creates jobs and economic growth well beyond the traditional oil patch industry.
So why do companies like Swiss Re care? Fracking is re-shaping large parts of the US and international economy and has significant geopolitical impacts. Many of these changes are only now beginning to appear and it will be very interesting to see how these economic and strategic issues develop over the coming years.
Together with the law firm Choate Hall & Stewart and insurance information firm Advisen, I'll be hosting a Drilling Down on Hydrofracking webinar on Tuesday April 1 at 11 am EST. Join to be part of the conversation about how these issues impact the (re)insurance industry. Register here: https://www1.gotomeeting.com/register/633662529
Image source: Wikipedia
Category: Sustainable energy: Fracking
Location: United States