Industrial Utility

In the vast arid lands of the Arckaringa Basin in Australia a major shale oil discovery has been made. Linc Energy has discovered across 16 million acres of land an estimated 133 – 233 billion barrels of shale oil that lies beneath the region’s lithology. No matter how much of this oil is recoverable using modern technology, the discovery is sure to be valued in the trillions at current market value. Peter Bond, chief executive of Linc Energy, is marketing a deposit that has the potential to transform the global oil industry. This is an incredible finding with incredible consequences.

Oil is a highly sought after commodity as it currently fuels much of the developed worlds economy – along with other fossil resources such as coal. Investment in this new discovery will suit well for investors. There is a lot of money to be made and the sheer volume of the discovery points to long-term production of the resource. This has major implications for the economy of the area as well. Production will raise demand for workers of all ability levels and educational backgrounds.

The immensity of this discovery is sure to plunge Australia into the latest energy boom: Shale energy. Spreading wildly across the United States and Canada, giant shale reserves have been exploited, increasing domestic energy production and causing economic booms across the region. Where there are booms, however, the business cycle illustrates a bust is sure to follow – especially when heavy government subsidies are needed to maintain the boom. Artificial bubbles always burst. For this reason a number of people protest shale energy speculation.

Shale energy is not productive enough to pay for itself, which is why governments have started heavily subsidizing natural gas extraction. It is true that the shale bubble has lowered energy costs in the short term, but this is because lenders, investors and government subsidies have lowered prices for consumers – the (not so) secrete mega investors in shale energy are tax-payers. As for the jobs boon, it is important to note that the high wage opportunities are for specialized labor. The majority of jobs produced are low wage – truck drivers, well pad operators and so on. When the shale bubble bursts, as always, the low-income, working class and middle class will shoulder the economic burden. Big money will be made for investors while communities deal with the economic bust and captured markets that follow production.

There is also an environmental movement protesting shale energy production. This movement is frowned upon by many movement libertarians. There are good reasons why as many mainstream environmentalists would use the power of the state to interfere with voluntary contracts and the rights of individuals to decide what to do with their property. There is also reason, however, to support a libertarian case against such industrial activity as well – such as compulsory pooling laws and the ever powerful eminent domain. For an example: Michael Hinrichs, director of public affairs for the Jordan Cove Energy Project and the Pacific Connector Gas Pipeline, said eminent domain was not their “preferred method” of obtaining development rights, adding: “We’d much rather come to an equitable agreement with the landowners.” Very noble of a company to only use coercive force after they fail to reach their desired agreement with property owners. Any libertarian should acknowledge that eminent domain is a gross violation of property rights. Compulsory pooling laws are just as intrusive.

Along with gas extraction comes road and well pad construction, noise and air pollution, increased smog, increased water pollution and giant tanker trucks utilized for the transportation of large volumes of freshwater for hydraulic fracturing and transportation of the harvested resource. In this arid region of Australia, any undisturbed wilderness is soon to be industrialized for the attainment of this resource, just as the rural lands of the States and Canada have been industrialized. This is of course true for all extractive industries – be it mountaintop removal coal mining in Appalachia, open-pit mining in the great open west or large timber operations in the Pacific Northwest (just to name a few). ...