Fracking: The Ultimate Scam Revealed

By touting natural gas as the clean-burning fossil fuel that is cheaper to use and helps reduce our dependence on foreign oil, the industry has nailed the PR trifecta: cheaper, cleaner and patriotic.

gas mask hydrofrackingOne of the great joys of writing, as in science, is the accidental discovery. To wit: penicillin. And while this entry hardly ranks near Alexander Fleming’s pharmaceutical breakthrough, it does relieve a particular itch that has been nagging my brain. For months I have been vexed by the discrepancy in pricing between crude oil and natural gas. (Wait, I know how tedious commodities can be but I promise you this column is worth sticking with.) Unable to settle on any fundamental market-based explanation, I placed the issue on the mental backburner. It was only when I decided to update a series of articles on the role of speculation in the commodities markets that I happened upon the most plausible solution to this puzzle.

First, a little context. Over the past couple of years New York State has been flirting with the idea of hydraulic fracturing, or “fracking.” The discovery of enormous pockets of natural gas in the Marcellus Shale formation that runs from West Virginia, Pennsylvania and New York to as far as Ohio, has led to a modern-day gold rush in the region, with Pennsylvania several years ahead of New York. While the gas has always been there, it wasn’t until the turn of the millennium when controversial chemical enhancements invented by Halliburton were added to a difficult horizontal drilling technique that accessing this gas became feasible.

Almost immediately, however, environmental concerns began to mount. Stories of contaminated groundwater, intense air pollution and, most recently, a ruptured fault line and mini-earthquake in Youngstown, Ohio, on Dec. 31, have begun leaking into public consciousness. Gasland, a documentary by Josh Fox, increasingly agitated environmental organizations, and high-profile activists such as actor Mark Ruffalo have helped fracking reach the tipping point in the media. Once seen as a panacea for rural land owners in depressed parts of the country, fracking has become a pariah in the environmental community, setting the stage for yet another battle between the oil and gas industry and environmentalists. Caught in the middle of the entire fiasco at the moment is Gov. Andrew Cuomo, who is cautiously moving toward legalizing fracking in New York, though his public reticence highlights how tenuous this decision truly is.

Early on, I came down firmly against fracking in New York, and the Long Island Press was in the vanguard of reporting on it downstate. So I’m on record quite clearly as to why I believe fracking to be a disaster for New York, or anywhere else for that matter. No need to rehash this position. Still, one piece of the broader issue was missing—until now.

Here’s the issue: Fracking is expensive. The prolonged low market price of natural gas is the most logical deterrent to increasing drilling because it barely pays to pull the gas out of the ground. Moreover, the U.S. Energy Information Administration projects that natural gas demand in the United States should rise only 11 percent over the next 25 years compared to a projected rise of more than 300 percent in China over the same period.

Here’s where the market rationale gets murky. Analysts point to increased demand for fossil fuel in developing economies as the primary reason behind the steady rise in oil prices. Goldman Sachs’ most recent forecast of Brent Crude Oil, commonly known as “sweet light crude,” is $120 a barrel for 2012, with most market analysts following suit. A weak dollar, the ongoing crisis and uncertainty in the Eurozone, a burgeoning conflict between the U.S. and Iran, and continued growth in China, India and Brazil are the oft-given reasons behind these prognostications.

Historically, natural gas and oil prices have generally moved in tandem, and with natural gas gaining momentum as the fossil fuel of choice, it only makes sense that they would continue their mirrored trajectory. Instead, the opposite has occurred. Crude oil remains stubbornly high and creeping ever higher while natural gas remains depressed.

A closer look reveals that the world has record stockpiles of both fuels, and has developed incredible potential for new sources such as the Marcellus Shale play or the tar sands in Canada. Then there are the yet-to-be-developed fields in Iraq that, according to the New York Times, are “expected to ramp up oil production faster than any other country in the next 25 years, with a capacity…more than traditional leaders like Saudi Arabia.” Or, if you prefer, the real reason we went to war in Iraq.

Excess supply, new discoveries, and sluggish demand—and yet only natural gas is acting appropriately in the markets. This behavior is undeniable proof that the invisible hand of speculation is at work, which naturally begs the question as to why traders would suppress the price of gas but not oil.

For this answer we must turn back the clock once again and revisit several acts in Congress over the past two decades that made it possible for banks to merge with investment banks and trade commodities without limits and without transparency. Much of this trading is done on the Intercontinental Exchange, a trading platform that was founded and owned by Morgan Stanley, Goldman Sachs and BP. When you understand that markets today are dominated by investment banks and oil companies, who are at times one in the same (Morgan Stanley’s direct holdings in oil companies, fossil fuel infrastructure and transportation companies make it one of the largest oil companies in America), it is possible to fully comprehend the psychology behind natural gas pricing. Oil companies and investment banks have the ability to move the market by forecasting prices and investing in their own products through opaque exchanges that they own, so no matter where prices are they are making money.

Now you’re ready for the secret behind the fracking con job.

As previously mentioned, domestic natural gas is difficult to procure. The process is devastating to human health and the environment, and the effects are irreversible. To gain momentum and influence public opinion, the oil and gas companies have launched an ingenious propaganda assault on America. By touting natural gas as the clean-burning fossil fuel that is cheaper to use and helps reduce our dependence on foreign oil, the industry has nailed the PR trifecta: cheaper, cleaner and patriotic. And with an earnest pitchman like T. Boone Pickens, who wouldn’t believe it?

The problem is none of the above is true. First, natural gas might burn cleaner than oil but the process to extract it is so harmful it doesn’t matter. And second, because the same companies who are in control of the product are in control of the pricing, once they sew up the drilling rights they can simply jack up the price. This leaves the final argument that is wrapped in the American flag and served with a side of apple pie: reducing dependence on foreign oil for the sake of the union.

For the truth, let’s check in with the rest of the world to see what they say. (This was the happy accident that prompted this column.)

According to India’s leading daily business newspaper, the Business Standard, “the increasing shale gas production in the U.S. has led to a surplus, likely to increase in the coming years. The U.S. is, therefore, eyeing export to countries like China, Japan, Korea and India… In the past, the U.S. has been an importer of gas.” The article goes on to quote A. K. Balyan, chief executive officer of Petronet LNG, India’s largest liquefied natural gas importer, who states, “With an increase in U.S. gas production, the gas receiving terminals need to be converted to exporting terminals.”


The average life of a fracking site is seven years. At best. The environmental and human health catastrophe is forever. All of the current talk of job creation and reducing dependence on oil is a sham. Our natural gas stockpiles are higher than ever and the demand for natural gas, by our own country’s admission, will remain basically flat until 2035. The oil and gas companies are planning to export gas from the Marcellus Shale region to the same developing economies we’re supposed to be competing against. How’s that for homeland security?

The real insult? American oil and gas companies are willing to risk the health and welfare of our own citizens by fracking on our land in order to export fuel they claim is more beneficial to the environment. Normally, our companies are busy screwing up other countries in pursuit of their natural resources for our own consumption. As if this isn’t bad enough, they are finally committing the cardinal sin of shitting where they eat.

Let’s do the right thing for once: Ban fracking now. There’s no other way.


Main Photo Image: Photograph from AP. April 22, 1970, the first Earth Day.
Long Island Press cover image. Original art by Jon Sasala
T. Boone Pickens
. AP Photo.

This article was published in the January 5th, 2012 edition of the Long Island Press.

Author: Jed Morey

Jed Morey is the publisher of the Long Island Press, LI's Cultural Arts and Investigative News Journal. The Press has a monthly circulation of 100,000, and, welcomes more than 500,000 unique visitors every month. He serves on the board of the Holocaust Memorial and Tolerance Center in Nassau County, as well as the President's Council of Big Brothers and Big Sisters of Long Island. In addition to the contributions on this blog, Morey authors a column for the Long Island Press titled "Off The Reservation" and is a staunch advocate for Indian rights. The column was voted Best Column in New York by the NY Press Association in 2010 and third overall in the nation among alternative publications by the Association of Alternative Weeklies in 2012. Morey lives in Glen Cove with his wife, Eden White, and their two daughters.

29 thoughts on “Fracking: The Ultimate Scam Revealed”

  1. No other way. How many chemicals and toxins or natural resources do we want exposed in our every day environment all for the sake of energy?
    Let’s go to the moon. Let’s put an all-out effort into renewable energy once and for all and quit our fossil fuel addiction and consumption? Who’s in?

  2. Great Article! Not surprised at the disingenuous tactics of the fossil fuel industry, or in the deceipt of their ‘pitchman’ T Boone Pickins. Remember, T Boone had been a major stockholder in Exxon when they did everything they could to deny & distort the science of climate change. He also has been a major sponsor of republican campaigns, including principally funding the ‘swiftboard’ ad campaign against John Kerry. And now, recognizing the effects of diminishing water supply due to climate change, he’s buying up water rights throughout the southwest. Stop these people now!!!

  3. The environmental movement is getting through with its message and the longer we push the debate the greater its ability to inform the public. For me, this article is the equivalent of getting Capone on taxes. It’s not sexy, but it strikes at the heart of their nonsensical homeland security and energy independence argument. And you’re right, Tim, Pickens is a classic con man shrouding himself in solar and wind while actually working against renewables.

  4. Mr. Morey, After reading the above I find your argument against the logic of hydraulic fracturing as full of empty cavities as a slab of swiss cheese. It is impossible for a commodity such as natural gas to be simultaneously expensive and difficult to produce and in vast over supply at very low prices. The natural gas that is now so abundant at such low prices is that way because the shales that are tapped with unconventional means are vastly more productive than the conventional wells drilled into limestones and sandstones, a resource base which was gradually failing, and would have left us in the same sorry state of dependence on foreign supplies as we find ourselves in regard to petroleum. Which problem by the way is also being alleviated by hydraulic fracturing of the petroleum resources found in the Eagle Ford shale in Texas, the Bakken shale in North Dakota and most recently the Utica shale in Ohio. It is quite true that the days of dependence on foreign oil supplies are drawing to a close. We just left Iraq, with no oil to show for that catastrophe, only the opportunity to buy that country’s future production at the world market price. And our largest single oil supplier, Canada, is now finding difficulties in connecting its tar sands with our consumers with the turn down of the Keystone pipeline. If Long Island were to turn its back on an obvious fuel source to be found in the hydraulically fractured shales, it is difficult to think of an alternative energy supply. Does anyone on Long Island seriously think of bringing back the Shoreham plant as a nuclear reactor? And if an alternative energy source such as wind sounds attractive, just try to site a wind farm anywhere on Long Island or its shorelines and get into a titantic battle with the NIMBYs certain to oppose such a project.

  5. Steve. You have absolutely no idea what you’re talking about. Sorry to be blunt, but wow.
    The whole point of the article is that the price IS manipulated on an exchange founded and owned by banks and oil companies who control the volume of trading.
    Further, shale gas is the least productive of all fossil plays. The best-case yield for shale sites is seven years. Most fall far short. They have the worst productive life out of all fossil fuel plays. Period.
    Regarding Iraq, your claim that we have “no oil to show for that catastrophe” is stunningly off base. Nearly every company involved in the drilling or infrastructure of oil in Iraq is controlled by American and British companies protected by quasi-government contractors paid by the Pentagon. So, no. Our government does not benefit from the oil in Iraq, the oil companies who control our government do.
    As to your last argument regarding LI turning its back on shale fuel… I just got through 1,500 words explaining how we’re not going to get the fuel, it’s going to India and China.

  6. Everyone needs to sign Walter Hang of Toxics Targeting’s petition to withdraw the SGEIS (Supplemental Guidelines to the Environmental Impact Study on Hydrofracking). Go to and sign it. I live upstate in the heart of the fracking debate, and I can tell you that already the rents here are going up, and the speculation among the greedy locals, smelling a quick buck has them all scurrying out of their meth labs and holding out their hands to catch the falling money. Because we are just north of the Pennsylvania state line, our stores and bars are seeing fracking money pouring in, along with the temporary gas workers from Texas and Oklahoma, and local townships have been making private deals with gas companies to take the chemical waste produced in the process and spread it on our roads as de-icer. They’re also selling water to Pennsylvania, and taking drilling cuttings into area landfills. I doubt if Cuomo will stand firm against the tidal wave of Big Oil money that is undoubtedly washing over him at this moment. Besides, this area has always voted Republican. What does he care if we’re collateral damage for the cancer ward? The only problem with selling upstate out to the frackers is, water trickles everywhere underground in this particular geological landscape, and eventually it will end up in the water tunnels servicing New York City. There has been a very vocal movement against allowing fracking into New York going on for some time here. Big Oil just keeps on moving along with its plans, making an inroad here, a secret deal there. Don’t be fooled. This will not go away without a major movement – upstate and down.

  7. This issue is so dear to my heart, you couldn’t know.

    I just read on the Food and Water Watch website that there are 5 proposed well sites on LI where they are planning to dispose of the toxic NY fracking wastewater! (this disposal process is what caused the earthquakes in Ohio Dec 31.)

    I hope it’s Ok to post this:
    Everyone, please come to a free Hydrofrack Action Meeting this week before the January 11 deadline for NY public comments. We are writing and mailing our comments together.
    There are 3 meetings left. We have speakers from Sierra Club, Stony Brook’s Marine and Atmospheric Science Dept, Food and Water Watch, and local researchers. ALL are 100% against fracking.

    Fri Jan 6 @ 7:00 pm-Unitarian Church East Setauket
    380 Nicholls Rd, East Setauket, 11733

    Sun Jan 8 @ 1:15pm – Levittown Public Library 1 Bluegrass La, Levittown, 11756

    Mon Jan 9 @7:00pm – Plainview Old Bethpage Public Library, 999 Old Country Rd, Plainview, 11803

    For more info, write to me at but give me a day or two to respond. And please RSVP if possible so I know how many handouts to bring.

    We will forever lose NY as we know it if we don’t stop this. All signs point to Gov Cuomo going through with it. Help us write letters to Cuomo, DEC Commissioner Joseph Martens, the DEC EIS, and our state reps! Come to a meeting! we’ll have all the supplies and addresses.
    We CAN stop this! We have to.
    Go to most public libraries on LI and rent GASLAND. (or come watch it at one of the 3 action meetings.)

  8. Fracking has nightmare written all over it, the earth quakes in Youngstown are a new wrinkle that had not been factored in as yet. Although the warning for people in the fracking area to leave a window open when you shower just adds a little bit of excitement to a normally mundane shower. Next we’ll have to put no smoking signs on the bathroom door for fear of an explosion.

  9. No, Jed, I’m afraid it is you who doesn’t have a clue spinning your yarns. Liquified natural gas sells for about 12 dollars a thousand these days. Natural gas sells for 3 dollars at Henry Hub as of today’s futures price. There is a very limited market market for LNG because of its high price, and there are a number of places around the Persian Gulf which will always undersell us in the most lucrative markets which happen to be India and Japan at present. Which fact knocks a huge hole in your whole conspiracy story about oil companies lined with banks. The underlying assumption you seem to be running on is that the nonsense of the Josh Fox version of reality in his mockumentary Gasland is based on fact. It isn’t, and of all places, Long Island, which is entirely dependent on the energy resources of other places, needs to face reality. 90% of all the gas and oil production in the United States already comes from wells that are fractured in order to stay in production. Ban hydraculic fracturing and the whole structure of today’s oil and gas industry at home and abroad will collapse. And I have a hunch that not many Long Islanders are willing or able to adjust to a lifestyle without those vital ingredients.

  10. OK. Here’s what to do:

    #1 MOST IMPORTANT: go to DEC website before Jan 11 and protest hydrofracking.
    click on SUBMIT
    enter your name, etc.
    Click on Comment on the 2011 rdSGEIS, then under
    SELECT THE CATEGORY try to click as many categories as you know something about. (or you can be really thorough and read their entire EIS. I tried. Good luck.)
    I submitted comments in these two areas below: Please DONT copy and paste my answers. They might start throwing them out.
    Have you had time to investigate the rashes, nausea, tumors, hair loss, hearing loss, taste loss, peripheral neuropathy, hospitalizations, medical expenses, and more, of people who have been exposed to hydrofracking chemicals in other states?
    Economically, it’s also obvious some of these residents can never sell their homes now because nobody else wants to live on toxic property either. Please research this fully before submitting NYers to the same mistakes.
    Also, you need to do more thorough research on the impact on tourism in beautiful upstate NY.

    Endangered species live in upstate NY. A full and thorough investigation should be done in the land around EACH PROPOSED SITE to determine if there are endangered wildlife in that area. Many of them use mating calls which could be drowned out by the generators and pumps. Others need clean water to lay their eggs. Isn’t it illegal to destroy the habitat of endangered species?

    #2. Call and write to Cuomo 518-474-8390.
    Governor Andrew M Cuomo
    Executive Chambers
    State Capitol Building
    Albany, NY 12224

    #3. Look up your STATE senator and STATE assemblyperson and cc them on your letter to Cuomo.
    Here’s how to find their names and addresses:

    state senate:    (enter your full address on top left of homepage)
    and assemblyperson

    GO GET EM everyone! Dont let them frack us!

  11. There are even more reasons why this is bad. Let us talk about pipelines. Can I post my comment to the SGEIS on the comment area? Long Island has an interest that HVHF not be permitted.

  12. FANTASTIC article Jed!

    Just a FYI– Here in Idaho the O&G industry is trying VERY hard to ram down our doors as well! We’re fighting them tooth and nail, but not very many people realize that we are in the crosshairs out here as well! They’re also trying to strip away ALL local control over the industry and hand it over to a six person board– the State Board of Lands. Alma


    Keep up the good work! Alma Hasse

  13. I hope NY pays attention to this article. As for PA, it’s already pretty much a lost cause. With state government as it is, and the population thinking how much they can make by selling or leasing their land to the gas companies, fracking is here to stay until the gas run out and the land is a waste.

  14. This was very informative and well-written, Mr. Morey. My small NY town in Livingston County is looking at hydrofracking as an economic boost. Several of my neighbors and I have been coming together to fight it – and we are gaining momentum. This article lays out some of the key arguments against this process and, since it’s based in economics and not so much in environmental concerns, perhaps the powers-that-be will actually listen!

  15. I don’t regularly subscribe to the Unified Field Theory of Everything where entities like the Trilateral Commission (remember them?) pretty much control the world as we suspect to be. But I am tempted to buy the latest, hot-off-the-press issue when world domination appears to be within the greedy grasp oligarchs. Then I think back to when the oil-rich Hunt brothers (whose father along with the Koch bros’ dad belonged to the wing-nut, now Republican mainstream John Birch Society) cornered the nickel market only to get nickel&dimed out of their last billion for the effort. It gave rise to Bunker Hunt’s lamentation to the Fed Ch Paul Volker that a “billion dollars isn’t what it used be.”

    Nothing would seem to be, but, then again, as much as thing change… Didn’t John D Rockefeller and Standard Oil once effectively control the world? And now the Rockefellers are reduced to being philanthropists and marginal senators from W Va while ExxonMobil doesn’t even rate a dishonorable mention in this column.

    In May of 2008, Goldman Sachs predicted oil would go to $200 a barrel. It peaked at $147 less than two months later and bubbled down well below $100 for some time before rising back to that plateau. The inflation-adjusted price for a barrel of oil remains pretty much on par with what it was thirty years ago. Admittedly, traders work off the ‘vig’ in the puts and shorts of a volatile market so, like Billy Ray Valentine observed in ‘Trading Places,’ the Goldmans of the world are like bookies who make money whether the price goes up or down. It’s only when they get super greedy, like the Duke bros or the Hunts, that they get hammered.

    The most tenable argument for domestic production of fossil fuels relates to the U.S. balance of payments. But, for the average American driver, the price of oil from the Gulf of Mexico is no different than from the Arabian Gulf. What domestic production does do is remind us how toxic the actual process of extraction can be. If you think contaminated drinking water and earth tremors are odious, go back to the mega oil strikes of the early 20th century like the one that blew out in Caddo County, La back in 1906 devastating farmland and livestock for dozens of surrounding miles.

    Out of sight, out of mind. Can anyone recall any clamor from supporters of offshore wind when LIPA connected its 660MW Neptune cable into midnight coal-fired power out of the PJM market? No complaints about those cheap PJM rates that kept high LI rates from going higher.

    Natural gas has been billed as cleaner alternative on the slow boat to a distant clean energy future (we’re not even able to seal up leaky, inefficient house without some Washington butt-head bureaucrat interfering). As it is 85% hydrogen, it burns much more efficiently than coal or oil). So it is a less-bad solution at the point of generation, but a toss-up when fracking is compared to Canadian oil shale extraction against which the main argument in the U.S. is the impact of the Keystone pipeline. And what happens to the lithium battery in my Prius or all the gazillions of computer batteries that we dump every year? What about the fracking waste fluid we are flushing down the kinds of holes that are destabilizing Ohio? And what of the consequences of CO2 sequestration?

    Kinda reminds of me of the two hips and one knee I’ve been obliged to replace over time. The hip prosthesis I received 15yrs ago was metal/plastic/metal which restored mobility when I was unable to get out of a chair at the end of the day. In other words, I had no choice. As it turns out, the plastic breaks down and eats away at the bone housing. Latest solution was to go with metal on metal which, as it turns out, eats away bone even more rapidly. So today’s solution sows the seeds for tomorrow’s destruction. But, you gotta walk today, right?

    When trying to consider how it all works out in the long run there are two takes to consider. “People don’t eat in the long run,” said an FDR staffer responding to Republican criticism of a New Deal work program, “they eat every day.” But, “In the long run,” economist JM Keynes noted, “we’re all dead.”

  16. “we’re all dead” unless a champion from among us (U.S.) stands firm and does not flinch from the incoming salvos. Again, Jed, just run for political office and save us (U.S.) from ourselves. Seriously, you need to buy Newsday and run it; run it correctly. Your Long Island Clone of the NYC Hippie paper is never going to gain the readership that’s needed. Become the William Randolph Hearst of our time and use your powers for good to save the planet.

  17. “You furnish the pictures and I’ll furnish the war,” Hearst famously told a correspondent in the lead up to the Spanish American War.

    To paraphrase Hearst, Frank, “you supply the investors and I’ll bring bring back Yellow Journalism to jaundice Americans against all the bad actors posing as ‘Great Americans.’

    …from my newly elected position of power in the U.S. Congress?

    Back to the drawing board, Frank.

  18. So Morey should languish at the LIP desk, never to do great things? Handing out a few dinners to the hungrey is ok, but I for one see something in his lexicon that actually could be the spark of political genius. True, WRH was a scumbag, but his ability to acheive what HE wanted, to direct the nation’s sheeple towards a common goal was respectable and with merit.
    Is it your opinion that Jed isn’t the hope which you seek? Then who is?
    You can call me Frank.

  19. Jed is a very talented fellow, Frank. But I’m not sure that he’s quite up to the task of mass manipulation, at this stage of his development.

    What are we doing, baking a cake???
    So was the current occupant of the White House was any further along from his “Community Organizer” roots?(sic). Look, all it takes to be the leader of the free world is a solid message and a powerful political machine to have your back. Are you saying Jed’s family connections couldn’t pony-up enough campaign cash to get him to the White House? I think the Morey family could become as iconic as the Kennedy Clan. With their holdings and charitable causes, Jed would definitely sweep Chuckie Schumer from Capitol Hill. In one term, he’d have enough exposure to convince Iowans that the name Morey is synonymous with America. Shame you don’t share my enthusiasum.

  21. Frank, I’m blushing. Slight technicality I must make you aware of.
    Unfortunately for the American people, even if I took a crash course in diplomacy at the Dorian Dale Policy Institute and studied the American Revolution harder than Sarah Palin on the campaign trail, I’m afraid this discussion is for naught.

    I’m Canadian.

  22. You are wrong on all points. You should do your homework instead of repeating what the tree hugging liberals write and broadcast.
    When you are freezing your rear off in a good old fasion winter and can’t afford fuel and your solar power sucks. You might re-think your bone head logic.
    Do your homework next time before you write such bull_ _ _ _.

  23. Oh, I see John (too afraid to leave my real name) Smith.
    I don’t regurgitate. I research and report.
    But really great and thoughtful comeback. No, really. Thanks for not bogging down your reply with any facts that might refute this column or (heaven forbid) any actual points. Saved everyone a load of time.

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