Critique of Mercer's Natural Resources

Cynthia Buchanan

Critique of Natural Resources

           

            Mercer did a fine job of communicating in a clear and concise way what the Wall Street Journal CFO’s were worried about, while also bringing in some of his own outside knowledge and insights.

The belt and suspenders reference is unique and obviously stood out to Mercer as it did to me while reading the article. The analogy emphasizes the care that lenders must take with their loans. Integrating the idea of natural gas drilling is a great example. A huge risk to invest, but when it proves successful the payout is extreme.

Although the Wall Street Journal article only mentioned drilling for natural gas briefly in the last paragraph, it fascinated me that Mercer decided to title the post Natural Resources. I agree that it was a wonderful detail to expand on.

An idea that must be considered when talking about domestically harvesting our natural gas reserves is externalities. Two parties may benefit does the third? At which point is drilling for natural gas a negative externality? It could go either way. The question still remains, to drill, or not to drill?

To think that drilling for natural gas can be done, and is being done today is incredible. The process used for extracting is called Hydraulic Fracturing, otherwise known as ‘fracking’. The technology is fairly new and the concept is highly confusing to the general public (which is completely understandable due to the media). The way the argument is framed gives an ultimatum, an unfathomable amount of capital, or protection of the environment and to some extent livelihood.

            Mercer quotes from the article “increase investment, diminish risk” (Bussey, 2013). This absolutely is a time where one must consider opportunity costs. Yes, fracking can be extremely dangerous, but it is also the answer to GDP growth for this country. Fracking is associated with lighting wells on fire and dead cows, for this, I thank the movie GASLAND, which gave inaccurate and bias ‘facts’ on the matter. If done correctly, and with the proper government regulations followed fracturing has the potential to, as Mercer points out, “open our economy up to a whole new source of revenue”. The Marcellus Shale in the United States is a vast reserve of natural gas. We could domestically have an abundant fuel source- not to mention natural gas is clean burning.  

http://www.epa.gov/cleanenergy/energy-and-you/affect/natural-gas.html

http://online.wsj.com/article/SB10001424127887323495604578539240821896764.html?mod=WSJ_hps_sections_management