From 1996-2005, I was a Wall Street buy-side and sell-side Energy analyst; with the last seven years spent as an Institutional Investor-ranked service, equipment, and drilling analyst at Salomon Smith Barney in New York. Believe it or not, that period of my life characterized a passion and commitment to Energy that I now demonstrate in Precious Metals; as described in my November 2011 RANT, “TWICE IN A LIFETIME.”
During that decade, I experienced EVERYTHING imaginable in the oil and gas sector; and traveled the world learning about it. When I left Salomon in February 2005, the consensus “long-term” oil price estimate was roughly $25/bbl – of Wall Street analysts and global oil companies alike; which in hindsight, fell “just a bit short” of REALITY…
At the time, it was tar sands – particularly in Canada – that were hailed as the “next great thing” that would permanently reduce global energy costs. As it turns out, tar sands have been a major BUST; given a host of issues including energy intensity, environmental damage, logistics, and costs…
…amongst a LONG line of failed “next great things”; from “Austin Chalk” oil drilling (pioneered by Chesapeake Energy)…
…to Ethanol…
The Disastrous Failure of Corn-Based Ethanol
…to hybrid-electric cars; a subject (not so) near and dear to my heart, after having spent three years as head of Investor Relations of Geovic Mining – which unsuccessfully attempted to develop a cobalt mine in Cameroon, Africa (cobalt is utilized in the lithium-ion batteries that power hybrid cars)…
Hybrid cars: an economic failure
Today, the “next great thing” is shale gas extracting – utilizing environmentally dangerous fracking methods. Believe me, I know fracking well, as I covered the world’s largest fracking companies for years – such as Halliburton, BJ Services, and Carbo Ceramics. This is not a new technology, but its application in certain geologic formations has created a sharp production increase in recent years…
Unfortunately, it hasn’t prevented WORLDWIDE crude oil prices from reaching – and hovering around – ALL-TIME HIGHS for years. And now that a substantial sample of such work is available, the “shale gas bubble” is starting to burst…
The Fracked-up USA Shale Gas Bubble
Some of the nation’s most optimistically promoted projects are falling flat on their faces…
Ohio’s $500 Billion Oil Dream Fades as Utica Turns Gassy
…as what do you know – shale gas drilling is also ENERGY INTENSIVE…
N. Dakota Bakken Oil Boom Will End in a Bust, Just like ’49 Gold Rush
…and MASSIVELY DEPLETING…
…resulting in plummeting reserve estimates…
U.S. shale gas reserve estimates plummet
…and plunging shale driller stock prices; such as Devon Energy…
…and – how about that – good old Chesapeake Energy…
I am no oilfield engineer. However, I know enough about BUBBLES to have an idea when they’re right under my nose; as when I discussed the Bitcoin Bubble just three days before it crashed (time stamp 8:30 to 11:00)…
Precious Metal Investing Update w/ Ranting Andy Hoffman of Miles Franklin Apr 6 2013
Perhaps “shale gas” will in fact yield the “Energy Independence” America has so desperately sought for decades…
However, I’ll take the “under” on that bet…
The last eight U.S. Presidents promised energy independence, nobody did it!
PROTECT YOURSELF, and do it NOW!
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Hey Andy,
I love the idea of a global effort to buy Silver on May 1st. Perhaps this will go viral and more people will notice that something is happening in the physical market. Maybe Miles Franklin can make a special one day offer available to all participants who place an order that day!
Love your rants,
A
Free shipping on orders over $2,500. We had a special until this morning on 100 oz RCM silver bars, but we just SOLD OUT.
I don’t know that canadian oilsands was ever heralded as a means to lowered energy cost. It has been more about independence. Just my 2 cents as someone at ground zero. No one in the industry would looks at sub 50 dollar oil prices as feasible for oilsands projects.
Another comment about the gas extraction thing. Drilling ground to a halt so that is somewhat disingenuous. We’ve seen prices spike up because production has fallen. If we had our priorities straight we’d be exporting gas as LNG and making a fortune.
CD,
I cannot speak for the current state of drilling; as that phase of my life ended in 2005. My piece is simply a big picture article about the fallacy of energy independence; which has been hyped as PROPAGANDA for years, but never occurs. And the excuse that “we have plenty of oil/gas, but the politicians won’t allow it to be drilled” doesn’t jibe with me; as everyone seems to ignore the COST of doing such.
As for oil sands, I was at ground zero when working at Salomon from 98-05. Tar sands WAS heralded as the next great thing; as they ALL are.
Andy
Hello Andy,
It’s very impressive to read about your back ground in the Energy Sector. You write how that period of my life your life characterized a passion and commitment to Energy and how it demonstrates how you write about preciious metals. I won’t pretend to have the knowledge you have regards to energy or the Financial System as a whole but I do I think have good basics like what you just wrote about. Chris Martenson over there at PeakProsperety.com is from that same school. What he calls the three E’s Enviornment,Energy & the Economy, he says when you see the world through thes three lenzes it helps decode the news and everything else that’s happening all around us. Chris M. is also a Fellow at the Post Carbon Institute (same website address. One of his Coleagues at Post Carbon is Richard Heinberg. Richard writes all the time about what you just wrote and it’s where I get most of my information. It’s 8:52am GMT as I write this and the Gold Chart has just went verticle on no news except for some German Employment figures just out.
Back to Richard Heinberg, you probably know of him already but if you don’t look him up. He has good economic back ground and like you and Chris Martenson he teaches how these are linked. Aldough I don’t think Richard H. is in favour of a Gold Standard because he writes more to do with Locallization, local currency and Community. I like to think likewise but I like having a little Gold & Silver as well.
Once gain and given your back ground with Oil Companies I hope I find your writings even more interesting. I don’t particularly like sending comments. They can be one sided and they are mearly how I would converse with you had I the good fortune to be in your company.
Regard’s again,
Daid W
Irish Reader
David,
Your comments are much appreciated; and enlightening. I don’t do a lot of reading about energy these days – except periperally; but when I see “bubble talk,” I notice – particularly when aided by PROPAGANDA.
Andy