What are the pros and cons of cheap US produced oil?

“But in the long run are we damaging the earth more by extracting shale oil?”

Do you really need to ask this question? Water is more valuable than oil; fracking is poisoning the truly very little potable water that is easily available to us. This is a no-brainer.

Who says gas should be cheap? It isn’t elsewhere in the world.

@dappled_leaves Ever hear of the Socratic method?

And there is an advantage to breaking the dependence on Middle Eastern oil.

The quality of shale oil isn’t the same as OPEC’s light sweet crude so it’s only really good for the making of Diesel fuel. Most of the good crude the US had was pumped and used as fuel for the WWII war effort.
The world is going to hell in a hand-basket, so what difference if we trash the place or not? Mankind won’t live to see or live in or correct the mess (trash heap Earth) we leave.
The world thrives on cheap oil, whatever the source, so pump it out!

@kritiper Yet, it’s my understanding (and the NY Times’s) that there is a glut of oil at the moment – partly due to slowing demand but partly because of US production.

@janbb No prob! We’re still driving our big SUVs. We’ll burn it all up soon enough!

These are valid questions.

In a rational economy – which I agree that we do not have and have not had in my lifetime – “costs” for extracted and refined items such as metal ores refined to production-ready metal shapes, and including farming and oil drilling and refining should include the costs for “negative externalities”, at least to the extent that those costs can be identified and quantified. In other words, as you correctly note, shale oil recovery includes a slew of costs that may not be accounted for in any way.

There does appear to be “unrecoverable” water used in the process. That is, the fracking chemicals are mixed with water and pumped underground to fracture the rock so that gas and oil can be extracted. A lot of that water stays deep underground (below aquifers) where it may never be recovered. Okay, so what is the cost to “create fresh water”? As long as water has been used by humans at the surface of the planet, it gets recycled normally through the hydrological cycle that we’ve been used to since before we had language. Pumping fresh water underground removes quantities of fresh water (insignificant quantities in the global scheme of “all water on the planet”, but potentially large amounts to local ecosystems). So, should fracking companies be required to reclaim equivalent amounts of non-potable water (ocean water, that is) to replace the fresh water removed from the local ecosystem? Water rates charged by municipal utilities are generally for “leased” water – the way humans have used it forever: use it, and return it to the system? Currently, that is not the case, but perhaps it should be.

In addition, fracking creates waste water at the surface, too, and it’s not at all clear that this water is always properly treated for eventual reuse.

I don’t think that “all development should be stopped until all possible negative externalities can be quantified and accounted for”. We’d still be living in trees, if that were the case. But it’s not clear that we have adequately examined and accounted for what is known.

Americans have proven again and again that they will not voluntarily conserve gas/oil by driving the highest fuel efficiency vehicles or car pooling or… any of dozens of ways to conserve fuel. The only system that really works is when prices go “sky high” which is still less than half the prices in Europe, Israel, Japan. No wonder they have such fuel efficient cars.

There isa glut now but rather than bank it or save it, Americans will begin to drive more and/or buy bigger cars and trucks.

The lower price will also reduce the incentive to research and develop alternatives. For example: Butanol with 5% gasoline is a great replacement for gasoline. Butanol can be made from anything that was growing like dead pine trees, or grass. But the process only makes sense financially when (not if) gasoline reaches $5.50 per gallon.
In typical American fashion we will continue to use gasoline until the prices rises to $5.49 per gallon and then act surprised when we have a crisis suddenly looming before us.
We are so predictable – and dumb. The Saudis love that.

Sometimes I am very glad that I am getting old.

Getting old does have some advantages – but I’d trade them all for youth (and a prostate).

Trust technology to fix it. 20 years from now we’ll be using butanol and will be arguing about the high price of food and fresh water.

^^Since we don’t have that option, I’ll take the consolations I can. :-)

Pros: Cheap fuel, low inflation, increased affluence
Cons: Global warming, putting off the inevitable, increased pollution.

(I’m sometimes glad I’m getting old too; but what about the children?)

^^Of course we worry about the children – and their children.

Actually, @LuckyGuy – and you already know this, so I’m curious why you used this argument – the fact that the price of fuel (and nearly every other good produced in “mostly free” economic systems) is allowed to rise is what spurs invention, development and production / use of “alternative” goods. I know that you understand this.

There are other forms of alcohol, including ethanol and methanol, that will also be used “when the price justifies their use” as fuels.

@CWOTUS I did mention it. Only I said it the other way around: “The lower price will also reduce the incentive to research and develop alternatives.”

Methanol and ethanol have lower energy densities than butanol. Butanol is close to gasoline and it is less corrosive. It does not have the same cold evaporation qualities as gasoline so for cold temperature climates it will need to have a little high RVP gasoline or other solvent to quickly start the engine.

One interesting aspect of falling oil and natural gas prices is the devastating effect on the coal industry. Of course, for the residents of third world states such as West Virginia, the upcoming economic hardship is going to be particularly brutal.

There are no cons as far as this United States citizen is concerned.

We’ll keep doing what we’re doing until we can’t. Then we’ll stop.
(And everyone will act surprised.)