“[T]he gatekeeper of the nation's money supply already has signaled it is planning to end its multibillion-dollar bond-buying program by the end of the year, and then begin to raise short-term interest rates toward historically typical levels from the near-zero rates that helped jump-start the recovery,” wrote Chronicle energy reporter Collin Eaton.
That bond-buying program, Bloomberg pointed out, helps frackers to stay on [the] treadmill. The combination of the end of the bond-buying and raising of interest rates is no small matter for drillers.
“Higher interest rates might make risky new bond issues by shale producers less attractive, and a flight of investor capital could leave the producers short on a commodity even more precious than oil: cash,” explained Eaton.
Junk debt earned the name for a reason: it means risky business for investors, but also a higher yield of the cut if the bet goes well. It also means the cash needed for frackers to do exploration and production and the drill baby, drill process.
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The accelerating treadmill comes at a steep ecological cost even if the cash has come free of charge via the Fed.
“We’re concerned about what riding out the accelerating treadmill means,” Hugh MacMillan, senior researcher for Food and Water Watch and author of the report The Urgent Case for a Ban on Fracking, told DeSmogBlog.
“It means tens of thousands of new wells each year, for decades, playing out as waves of systematic, widespread and intensive targeting of communities as years go by and as local economies go boom and bust. It means far more climate pollution than we can afford, and it means a legacy of risk to vital sources of drinking water for generations.”
Read original article at Federal Reserve Policy Keeps Fracking Bubble Afloat and That May Change Soon
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