Well, that was fun, folks. Back at the height of the housing bubble, natural gas prices spiked. This made it economical to adopt an existing oil-industry technique (developed in no small part by the federal government), hydraulic fracking, in the pursuit of natural gas trapped in shale rock. This set off a gold rush, and like California in the 1850's, a lot of people are losing their shirts and the only people making money are those selling equipment to the suckers. The rush mentality set off a huge burst of production, which preceded to cause, in combination with the recession, for prices to fall from nearly $11 per thousand cubic feet at their peak in 2008 to under $2 at their bottom last April.
So what is the status of fracking now? A new report from the PostCarbon Institute lays it out in gory detail. Besides a lot of investors drowing in a mountain of red ink due to the rock-bottom prices, production has flat-lined. Worse yet, the production rates of fracked wells plummets from the moment they are first tapped, falling by over 60% on average the first year and around 50% per year for the next few years. Even to maintain flat production, something like $40 billion dollars of new equipment and drilling needs to be purchased every year. In true Red Queen fashion, the fracking industry has to run faster and faster as its old wells' production falls like a rock, and new replacement wells, which are drilled ever further from the "sweet spots", have even less initial production and faster declines than the wells they are replacing. It is a race they cannot win. Even if they can outrun their creditors, they can't outrun physics and geology. There just isn't that much frackable natural gas out there. Below is a map of the major shale gas plays. Note that they span about a quarter of the lower 48. We've already poked and prodded everywhere, folks. There are no more big plays to be found, and the biggest ones we have either leveled off or already in decline.
So no, fracking is not the long-term solution to anything. It is an unsustainable boomlet that buys us at most a dozen years or so. The same is true for the shale oil boomlet as well - it is a decade's worth of very expensive oil. Both will peak sometime around 2020 and then we will enter yet another phase of long-term decline in production. When we burn it and it is gone, and our only remaining choice to go after something that is deeper, thinner, dirtier, and even more expensive. We need to start immediately on a major effort to plan for and construct the necessary infrastructure for a world where both oil and gas are very expensive, and we should be focusing on protecting our remaining high-quality oil and gas reserves rather than gold-rushing them into oblivion. Our current path is madness.