Financial Analyst Educates On How The Industry Fooled Investors
By Terrah Baker
When you want to understand an industry as large as that of shale gas, it’s important to start with the almighty dollar. That’s where Financial Analyst Deborah Rogers comes in. She’s attempting to connect the dots on how the money has played a role in the natural gas game. And it is a game, she explained — a game with a lot of money and loss.
“I want to educate on how the Wall Street investment banks have kept the game alive because it should’ve come unravelled … but the investment banks have earned a lot of money by flipping shale deals. So when people start to understand the money trails, they get a better feel for what’s actually happening in their communities,” Rogers said.
Her credentials include founder of the Energy Policy Forum, being appointed to the U.S. Extractive Industries Transparency Initiative and serving on an advisory committee for the Department of Interior and serving as a financial analyst on Wall Street. On top of this, she talks with crowds and lawmakers on all levels, because, she said, she’s fed up with shale gas corporations manipulating investors.
So far, she said, the only people who have made money on the extraction of natural gas has been investment banks through mergers and acquisitions, a handful of shale executives at the very top, and of course our own politicians who accept campaign contributions to vote in favor of the industry. It’s everyone else — regular citizen investors with pension funds and the like — who have been the losers of the game.
“Would I have a problem if the wells made money and it was a good investment? No. But they don’t, and they’ve known that for some time. But they continue to access the capitol markets and use other people’s monies to do things that I think are questionable.”
By overvaluing the natural gas investments — sometimes quoting 500 percent over actual value — shale deals became a hot ticket on Wall Street by late 2008. In fact, they became the largest profit center in fee generation, taking the place of mortgage-backed securities. But, like the predatory mortgage loans of the past, the facade of natural gas is beginning to unravel.
“That’s called shareholder destruction. Too many buyers of these assets have gotten burned. So they’re not as willing to jump into shale investments anymore,” Rogers said.
Since drilling for natural gas requires huge capitol investments, which are now drying up, it means the euphoria is finally clearing. For many communities where drilling has already occurred, it means land owners and others can’t depend on the huge revenues that were promised. And it means the environmental and financial degradation has to be paid for — and Rogers’ guess is industry won’t be picking up the tab; leaving only taxpayers and landowners now burdened by the cost.
Because natural gas isn’t the energy-saving-grace industry promised, a larger question still remains. Where do we go from here in terms of energy production?
“So we know that hydrocarbons are finite … they could run out next week or in 200 years. No one knows exactly, and it doesn’t matter, because what we do know is that it will run out,” Rogers explained.
But how do you take a global economy built on the bedrock of hydrocarbon energy to a new, sustainable future with the least disruption as possible? Rogers said it will happen by ending subsidies to hydrocarbon, which are enormous, and putting those monies into renewables, using hydrocarbons to stabilize the price.
“If the wind isn’t blowing or the sun isn’t shining and you have to bring in hydrocarbon power, fine,” she said.
The love relationship that’s been held between the U.S. and hydrocarbons for over 100 years must eventually come to an end, and Rogers sees the natural gas game as a last ditch attempt to hold on. Like any bad relationship, hydrocarbon corporations are willing to say whatever it takes to keep the relationship together. Rogers feels they’re losing as investors back out, and the renewable economy grew 8 percent during the economic downturn of 2008 alone — a huge growth, she said.
Now, Rogers and many are hoping what wins in the end is the long-lasting and potentially infinite renewable energy resources that can actually start bringing investors and every day people to a financially stable, more environmentally-friendly future.
To learn more about Rogers and her work, visit energypolicyforum.org/about-us/deborah.