Executive Summary

• In short, we've been lied to about the production potential of America's shale wells
• Huge decisions have been made based on the (faulty) assumptions we've swallowed
• When it's finally clear than much less is going to be available (and at a higher price) all hell will break loose
• The choices we make right now will determine how bad the reckoning will be

If you have not yet read Part 1: The Shale Oil 'Revolution' Actually Reflects a Nation in Decline, available free to all readers, please click here to read it first.

The reason I keep bringing us all back around to the energy situation is because it’s so critical to, well… Everything. 

To make good decisions, you have to be armed with good information.  That’s not easy to find these days, especially in the US where we are saddled with a massive propaganda campaign when it comes to energy.

It’s aim seems to be to convince everyone that there’s nothing to worry about. It's a near-constant barrage of these sorts of talking points and ideas:

• The US is the new Saudi Arabia
• The US is hitting new production records each month
• The US is now a net exporter of oil for the first time in 75 years
• Technology has improved so much that shale wells can now break even at $40/bbl oil prices.

And so on.

The problem with this sort of messaging is that the statements all need a couple of giant asterisks next to them, with some heavy explaining attached to add critical missing context.  They're misleading, at best. And collectively inaccurate.

If you buy into these stories, you'll probably make the wrong choices.  When, not if, but when the US enters the next phase of the oil story, it will all be over.  There aren’t any new source rocks to go after. 

I think we’re just a few years away from that decline phase, which means we don’t have a lot of time to prepare for what is certain to be an ugly period of adjustment. 

Look, I know it's possible that some new technology might come along that may improve oil recovery rates from shale deposits, thereby extending this whole story out a few more years or decades.