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I read with interest the comments to my post "Ok, you've made your point".
Life will go on after Oil. The pursuit of wealth will go on, as well. We will always compete for what it is we truly desire most (and we all know, in our heart of hearts, what that is)... no amount of grey-haired pony tails claiming a tye-dyed uniformed worker's paradise is going to change that... and wealth will NOT be defined as a tenement apartment in a city.
Maybe wealth will be defined by gold... but I doubt that, too. Wealth will be defined as the "means of production" that has always defined it... and nothing "produces" stuff quite like land. Timber, crops, livestock products... these things cannot be produced in a city apartment or suburban home.
The massive cities of today have one tremendous liability - sanitation. The waste produced by 8 million people is truly of a volume of mind boggling proportions. Concentrating populations in small areas that will need heat, cooking fuels, a means of making a living, and sanitation with severely constrained energy inputs leaves much to be desired. Its all about energy inputs - if nuclear, solar, wind, ethanol, etc... can produce consumable energy in amounts sufficient to run any given closed system, then this is not an issue... if not, the outcomes are not terribly appealing.
Of course, the U.S. wastes electricity like we do potable water... and that makes for a great deal of slack within the system... but only for a very short period of time, say a decade - and then one must think about the economic effects of curtailing electricity consumption (and that is a very significant consequence).
No, mega-cities like New York, Chicago, Sao Paulo et al simply could not exist in a severely energy constrained environment... how that unwinds and over what time frame with what unintended consequences... well, your guess is as good as mine.
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Much has been said about "Shale Gas" and "Fracking". I have read most of it. As in all things, it seems to be nothing short of "Sex, Lies, and Videotape". So I go back to the numbers. The largest Shale contributor to U.S. Nat Gas production is the Barnett formation. It produces a whopping 6% of the Nat Gas produced in the lower 48.... or about half what the U.S. imports from Canada every year... and to get that 6% required about 20% of the drilling equipment by capital investment.
The Haynesville play has got to be the biggest disappointment yet in Shale Gas given the hype that surrounded it. Last year, Haynesville was going to save the U.S. from imported Oil... now, those companies with the largest exposure to Haynesville are moving rigs elsewhere.... Haynesville might make sense at $15 mmf Nat Gas, but it is suicide at $4.25.
Mayb, MAYBE, the Shale Gas extractions can overcome the decline in conventional gas plays for a couple of years... but no more (and maybe not). The media onslaught and propaganda from "Big Gas" has convinced the futures market that Nat Gas will never rise again and if we give these guys all of the capital and permitting they request they can save us from $200 Oil with their Shale Gas production - my bet is that the market has been fooled along with the public.
This is not a recommendation to buy Nat Gas futures... Nat Gas is THE MOST VOLATILE FUTURES CONTRACT on the board, and has been nicknamed "The Widow Maker" by futures traders with very, very good reason.
Meanwhile, back at the Oil Ranch....
I look forward to monday's action in the crude futures market like it was "Super Sunday". This could be one of those moments of truth, or nothing more than just another lie in the markets.