The Role of Activists and Information

I knew what Rolling Stone magazine would argue in its recent article on fracking and Chesapeake's CEO Aubrey McClendon (see The Fracking Bubble by Jeff Goodell in the March 15, 2012 issue).  Because of its readers, Rolling Stone would have to argue that fracking is bad for the environment, and that the firms doing the fracking are manipulative and greedy.  Of course, I was right.  So was there any point in reading the article, if the conclusion was decided before the research?  I argue: yes.

Activist media like the Rolling Stone are not charged with objectively researching an issue and providing its readers with what it needs to hear, instead of what it wants to hear.  That job goes to people like me and media like The Economist.  No, the charge of Rolling Stone is to accumulate all the information that can be effectively used to make fracking and people like Aubrey McClendon look bad.  First decide the argument, then go get the evidence.  Much as a lawyer arguing a case.

Consequently, reading the article helps you acquire information you might not normally stumble upon.

For example, I was not aware of the "first, rigorous, peer-reviewed study of pollution at drilling and fracking operations."  After examining 60 sites in the Northeast, the study found, "systematic evidence for methane contamination."  I'm skeptical the article was presented to me properly (a recent article in Science News said the risks of fracking "are very similar, if not exactly the same, as the impacts that we see from conventional gas development"; March 10, 2012, page 11) but still, I was unaware of the study.

I was also unaware of the fact that operations like Chesapeake appear to be making much of their money by discovering potential fracking sites and then "flipping" the site by selling it to others.  The article reports that McClendon told a group of Wall Street analysts in a conference call that, "I can assure you that buying leases for x and selling them for 5x or 10x is a lot more profitable than trying to produce gas at $5 or $6 per million cubic feet."  This means that the motivation to drill, drill, drill may not be tied to the long-term profitability of fracking, after the markets sort prices out and the true environmental impact of fracking becomes known, but instead to the perceived long-term profitability of fracking by the same investors who perceived in the long-term profitability of mortgage-backed securities.

The article makes fracking seem something like a bubble, and while their case is not terribly strong, I am concerned that most of the firms promoting fracking will be protected against future lawsuits because they will no longer own the wells, just as banks didn't have to worry about the housing bubble if they sold the mortgage as soon as the money was lent.

Thus, activist media are like little demons scrambling all about the world looking for every scrap of evidence supporting a preconceived notion, and sometimes, those scraps of evidence are worth the damage these demons due to the psychology of a society.