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“How American Fracking Changes the World”

Sigma Investment Counselors

November 30, 2018

This is the title of a recent Wall Street Journal article written by Walter Russell Mead.  It is not practical to attempt to summarize Mr. Mead’s comments, but the underlying theme of his position is, “low energy prices enhance U.S. power at the expense of Moscow and Tehran”.

We have previously looked at the potential for fracking from the perspective of investment opportunities, see our blog titled ‘Two Dollar Gasoline’, posted 05 Nov 2013.

Anecdotally, we recently refueled a rental car near the Mobile, AL airport for $2.07/gallon.

The advent of U.S. shale as a major energy market force has materially impacted OPEC and Russian price fixing schemes and pressures major oil producing country’s budgets.

Investors should also consider the implications of the shale revolution in the context of technology, as that is what enabled the advanced methods for oil prospecting and extraction on which shale depends.

Mr. Mead’s closing comments might be useful to thoughtful investors.  “From the transistor to satellites to the internet and now shale, it is America’s innovation-as much as its hard power and diplomacy-that shapes world politics.”

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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