The nation is buzzing about natural gas these days. My colleagues across the industry are saying how natural gas will save America. And how it will finally kick our addiction to foreign oil... and transform our great nation into a major exporter.
But what I can't believe is how 95% of them have flat out got the story wrong. (It's going to cost them huge sums of money.)
This is not America's natural gas boom. Far from it. This is Planet Earth's gas boom.
To prove it... let me tell you an industry secret. Gazprom – the Russian beast that once had a lock on Europe's gas business – is in big trouble. Fracking has destroyed its business.
For years, Gazprom was an industry bully. As the world's largest supplier of natural gas (at least the conventional stuff), it raised prices and cut supplies at will. Just like those bastards in Iran, Gazprom used energy as a weapon.
But today... it can't. It's at the mercy of the free markets.
Late last week, Gazprom hit us with a bombshell announcement. It cut its prices by 10% – smack dab in the middle of one of Europe's harshest winters on record.
"Our partners asked us to revise our prices," said Alex Medvedev, Gazprom's deputy CEO, "and what we did is correct the parameters of our formula, which led to a relative price reduction of 10% on average."
Gazprom knows it can no longer use its gas as a weapon. Thanks to the same kind of unconventional gas plays we're boasting about here at home Europe no longer needs Russia. It can buy cheaper gas somewhere else.
Here's what I mean.
Just before Medvedev's announcement, Poland's treasury minister made a daring move. He spit in the face of environmental naysayers and told his country's gas drillers to get to work. He wants every company that holds a permit to explore for gas (there's over 100 of them) to frack at least 12 new wells each year.
His rationale? Poland's gas is expected to be 50% cheaper than the stuff Russia is stuffing into its pipelines.
That's bad news for Russia.
So what's Gazprom's answer? It's turned to China.
After 10 years of trying to get its foot in the door, Medvedev told reporters in New York last week that he "optimistically expects" to cut a deal with China this year.
It is not going to happen.