Wednesday, January 28, 2015

Meet The Frackers

I'm not American but books like The Frackers make me proud to be a US ally! The book tells the story of a number of people who risked it all - their finances, their personal lives, their reputations - to chase their dreams. In so doing, as is the norm with capitalism as it is setup in the US, they increased the standard of living (by reducing the cost of energy) for not just Americans but for the whole world.

While everyone believed American oil production was done-for, a group of risk takers took advantage of advances in drilling technologies to revolutionize the industry. Many of these guys lost their shirts, while others made it big. Zuckerman does a good job of summarizing the events leading to the reversal of US energy production declines of the last decades.

Of course, there must be energy trapped by shale rock all over the world, and yet so far this is a uniquely American story. America's incentive system no doubt plays a massive role here: resources under land belong to land owners in America, whereas in other countries they belong to the government.

I was struck by just how contrarian some of these wildcatters were. While the easiest oil had already been found, and pundits/analysts believed production of the remaining oil was too costly, these guys persevered. This is not a unique trait to the energy industry, as some of the most successful entrepreneurs in history have achieved their successes in the face of naysayers.

At the same time, it's clear you have to be a little crazy to be one of these guys. Even after striking it rich, some of them want to keep putting it all on the line for the next big score, sometimes with disastrous results.

Often I find that I can get lost in epic stories like these, as there are always a ton of players and moving parts involved, but I thought Zuckerman told the tale well enough such that I rarely had to reference the Cast of Characters page to understand what was going on. I recommend the book to anyone interested in the topic.

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