TIME cities

The 5 U.S. Cities Bouncing Back Strongest From the Recession

Houston, Texas
Houston, Texas Murat Taner—Getty Images

Metro areas in the South and the West are flourishing

U.S. cities in the South and West are more likely to have recovered from the recession while metropolitan areas in the Midwest and Northeast have largely struggled, according to a new report.

The Brookings Institution report finds that Austin, Houston and Raleigh, N.C., have outpaced other U.S. cities in terms of GDP growth per capita and rising employment since 2007, with Fresno, Calif., and Dallas rounding out the top five.

(MORE: Oklahoma Shakes—Is Fracking to Blame?)

The report, released Thursday, tracks how cities around the world have fared since the recession. Globally, the main metropolitan drivers are found in developing countries, especially China and Turkey.

In the U.S., the cities with the strongest GDP growth and employment levels since the Great Recession are generally found in the south and west, largely due to the growth of the energy sector.

“Those places are the epicenter of what has been the shale energy boom that’s been occurring in the U.S.,” says Joseph Parilla, a Brookings research analyst and lead author of the Global MetroMonitor report.

(MORE: The Rise of Suburban Poverty in America)

Cities in Texas and Oklahoma have especially benefited from the expanded production in oil and gas thanks to an increase in fracking, a process that extracts natural gas from shale.

The cities that have seen the least progress are largely clustered in the Midwest and Northeast in areas that are historically industrial and manufacturing hubs. Most of those cities—like Kansas City, Mo., Allentown, Pa., and Dayton, Ohio—have only partially recovered or not recovered at all, according to Brookings.

As the U.S. continues to see good economic numbers, many of which were touted by President Obama in his State of the Union address on Tuesday, most cities are still struggling to rebound from the recession. More than half of U.S. metropolitan areas either have not recovered from 2007 GDP per capita levels or have not fully seen a rebound in employment.

TIME Environment

Study Links Ohio Earthquakes to Fracking

Ohio Oil Fracking
A rig hand works the controls while changing out a drill pipe at a Knox Energy Inc. oil drilling site in Knox County, Ohio, U.S., on Dec. 8, 2014. Ty Wright—Bloomberg/Getty Images

Fracking wells near fault lines induced the quakes

Fracking wells close to fault lines induced a series of earthquakes in Ohio, according to a new study that paints a clearer picture of the link between the controversial drilling practice and earth tremors.

The study, published this week in The Bulletin of the Seismological Society of America, found that fracking, formally known as hydraulic fracturing, may have built up subterranean pressure and caused slippage in an existing fault that contributed to dozens of mild earthquakes in Poland Township, Ohio, in March. Two of the earthquakes were large enough to be felt, though they did not do any damage. The study was reported by the New York Times.

Wells further away from the fault line were not related to the tremors, according to the study.

“It appears you have to be quite close to the fault for fracking operations to trigger earthquakes,” Michael R. Brudzinski, a seismologist at Miami University in Ohio and the co-author of the study, told the Times. “Having that sort of information helps us to see that this stuff is pretty rare.”

The research adds to growing concern among geologists that fracking can cause or intensify earthquakes. In April, scientists said for the first time that the Ohio earthquakes were linked to the gas extraction process, prompting Ohio to issue strict permit conditions.

A spokeswoman for the Ohio Department of Natural Resources told the Times that existing fracking wells were still in production but further fracking has been banned. New York State banned the drilling technique last week, citing concerns over water and air contamination.

[NYT]

TIME energy

New York Bans Fracking

After years of debate in the state over the controversial drilling technique

The administration of New York Governor Andrew Cuomo announced Wednesday that the controversial drilling technique known as fracking will be banned in the state, citing concerns over risk of contamination to the state’s air and water.

“I cannot support high volume hydraulic fracturing in the great state of New York,” acting Health Commissioner Howard Zucker said. The announcement comes after years of debate over the practice, during which New York has had a defacto fracking ban in place, the New York Times reports.

Fracking employs chemicals and underground explosions to release oil and gas trapped in shale deposits that are inaccessible by conventional drilling techniques. Some environmentalists contend that fracking contaminates groundwater and can contribute to seismic activity, and that increased drilling activity can contribute to air pollution and other environmental problems.

[NYT]

TIME Economy

#TheBrief: Why Gas Prices Are Falling

The reason you're paying less at the pump

You may have noticed a lower number on your gas station receipts. The average price of gas in the U.S. is now $2.55 per gallon, the lowest it’s been since 2009. We’re told to never question a good thing, but why are these prices falling?

Watch The Brief to find out why you’re spending less than usual at the pump.

MONEY energy

3 Ways to Profit from Falling Oil Prices

Fortune Teller's ball with oil sloshing inside
Gregory Reid

Stagnant global demand and increased supply has pushed oil to its lowest price since 2009. Here's how savvy investors can take advantage.

Big jolts to energy prices are often caused by major economic imbalances—like rising tensions in the Middle East setting off supply scares. Or a dropoff in demand from a recession, causing prices to plummet.

This time there is no global crisis behind crude’s slide (from $105 a barrel in the summer to around $60 recently, its lowest level since 2009). Instead to blame: fresh worries about growth in Europe, Japan, and China, set against rising production in Saudi Arabia, Russia, Libya, and the U.S.

Don’t expect producers to turn off the spigot just yet, especially in the U.S., where the burgeoning fracking industry can still profit at lower prices. Analysts at Goldman Sachs predict output and use will both grow in 2015, but supply will outpace demand. That should push oil down further. Here’s how you can protect your portfolio and profit from the oil glut.

Your Action Plan

Ease off emerging markets. Russia and Iran need oil at or above $100 a barrel to avoid major budget deficits, says Matthew Berler, CEO of investment firm Osterweis. The Saudis have been playing hardball by refusing to cut production, and if they continue, “other parts of the emerging markets could get hit,” says Tom Forester, head of Forester Capital Management. Good reason to cut emerging markets to 5% of your portfolio.

Bet on shipping. With gas expected to stay 30¢ a gallon below 2014 highs, “the transportation industry is getting a big windfall,” says economist Edward Yardeni. Railroad stocks have been on a tear for years. So lean toward cheaper truckers and airlines, which benefit from sinking prices and rising spending. Two-thirds of SPDR S&P Transportation ETF is in those industries.

Save on a gas sipper. “When gas prices go down, you see an immediate impact on vehicle choice,” says John Krafcik, president of pricing site TrueCar. Automakers have already begun discounting super-fuel-­efficient cars—the Ford Focus Electric recently fell $6,000—and Krafcik expects to soon see “fantastic deals” on gas-engine midsize and compact sedans, which can get 30-plus mpg. Everyone else may be buying big—the SUV is back!—but a contrarian play may pay off in the long haul.

 

TIME Know Right Now

Know Right Now: Why Gas Prices Are at the Lowest Point in 4 Years

Gas prices have dropped significantly for Americans, and several factors are driving the change in prices

American drivers may have noticed a smaller bill at the pump recently– that’s because the average price of U.S. regular gas has recently reached $2.72 a gallon, the lowest it’s been in four years.

In the last two weeks alone, the average price has dropped 12 cents. But what is the reason for these dropping prices? Watch this video to find out what’s causing the cheaper fuel, and where you can find the most affordable gas in the country.

TIME Innovation

Five Best Ideas of the Day: December 5

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Peak gas: According to some forecasts, the fracking boom could be a bust.

By Mason Inman in Nature

2. To end the conflict with Boko Haram, Nigeria needs to address the alienation of its Muslims.

By John Campbell at the Council on Foreign Relations

3. “Protecting our coal workers is critical to successfully solving the climate problem.”

By Jeremy Richardson in the Union of Concerned Scientists

4. Tanzania can fight child marriage and protect the next generation of women by keeping girls in schools.

By Agnes Odhiambo in Human Rights Watch

5. When the last baby boomers move into retirement around 2030, today’s youth will carry the weight of our economy. They need support now.

By Melody Barnes in the World Economic Forum Blog

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME energy

Follow the Sand to the Real Fracking Boom

Halliburton Co. "sand castles" stand at an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colorado on Aug. 12, 2014.
Halliburton Co. "sand castles" stand at an Anadarko Petroleum Corp. hydraulic fracturing (fracking) site north of Dacono, Colorado on Aug. 12, 2014. Bloomberg—Bloomberg via Getty Images

Frac sand is poised for even more significant gains over the immediate term

This post originally appeared on OilPrice.com.

When it takes up to four million pounds of sand to frack a single well, it’s no wonder that demand is outpacing supply and frack sand producers are becoming the biggest behind-the-scenes beneficiaries of the American oil and gas boom.

Demand is exploding for “frac sand”–a durable, high-purity quartz sand used to help produce petroleum fluids and prop up man-made fractures in shale rock formations through which oil and gas flows—turning this segment into the top driver of value in the shale revolution.

“One of the major players in Eagle Ford is saying they’re short 6 million tons of 100 mesh alone in 2014 and they don’t know where to get it. And that’s just one player,” Rasool Mohammad, President and CEO of Select Sands Corporation told Oilprice.com.

Frack sand exponentially increases the return on investment for a well, and oil and gas companies are expected to use some 95 billion pounds of frack sand this year, up nearly 30% from 2013 and up 50% from forecasts made just last year.

Pushing demand up is the trend for wider, shorter fracs, which require twice as much sand. The practice of downspacing—or decreasing the space between wells—means a dramatic increase in the amount of frac sand used. The industry has gone from drilling four wells per square mile to up to 16 using shorter, wider fracs. In the process, they have found that the more tightly spaced wells do not reduce production from surrounding wells.

This all puts frac sand in the drivers’ seat of the next phase of the American oil boom, and it’s a commodity that has already seen its price increase up to 20% over the past year alone.

Frac sand is poised for even more significant gains over the immediate term, with long-term contracts locking in a lucrative future as exploration and production companies experiment with using even more sand per well.

Pioneer Natural Resources Inc. (NYSE:PXD) says the output of wells is up to 30% higher when they are blasted with more sand.

Citing RBC Capital Markets, The Wall Street Journal noted that approximately one-fifth of onshore wells are now being fracked with extra sand, while the trend could spread to 80% of all shale wells.

Oilfield services giants such as Halliburton Co. (NYSE:HAL) and Baker Hughes Inc. (NYSE:BHI) are stockpiling sand now, hoping to shield themselves from rising costs of the high-demand product, according to a recent Reuters report. They’re also buying more sand under contract—a trend that will lead to more long-term contracts and a longer-term boost for frac sand producers.

In this environment, the new game is about quality and location.

Frac sand extraction could spread to a dozen US states that have largely untapped sand deposits, but the biggest winners will be the biggest deposits that are positioned closest to major shale plays such as Eagle Ford, the Permian Basin, Barnett, Haynesville and the Tuscaloosa marine shale play.

The state of Wisconsin has been a major frac sand venue, with over 100 sand mines, loading and processing facilities permitted as of 2013, compared to only five sand mines and five processing plants in 2010.

chart

But with the surge in demand for this product, companies are looking a bit closer to shale center to cut down on transportation costs and improve the bottom line.

One of the hottest new frac sand venues is in Arkansas’ Ozark Mountains, which is not only closer by half to the major shale plays, saving at least 25% per ton on transportation costs, but also allows for year-round production that will fill the gap in shortages when winter prevents mining in northern states.

Related: 5 Things You Probably Don’t Know About Fracking

“In the southern US, we can operate year round, so there is no fear of a polar vortex like that which we saw last year with some other producers,” says Mohammad of Select Sands.

Chicago-based consulting company Professional Logistics Group Inc. found in 2012 that transportation represented 58% of the cost of frac sand, while Select Sands (TSX.V:SNS), estimates the costs between 66-75% today.

The competition is stiff, but this game is still unfolding, while increased demand is reshaping the playing field.

US Silica Holdings Inc. says demand for its own volumes of sand could double or triple in the next five years, and its three publicly-traded rivals—Emerge Energy Services (NYSE:EMES), Fairmount Santrol (NYSE:FMSA) and Hi-Crush Partners (NYSE:HCLP), have also made strong Wall Street debuts over the past two years.

TIME energy

Why America’s Fracking Revolution Won’t Be Hurt (Much) By Low Oil Prices

Fracking In California Under Spotlight As Some Local Municipalities Issue Bans
Pump jacks and wells are seen in an oil field that uses fracking on the Monterey Shale formation near McKittrick, Ca. on March 23, 2014. David McNew—Getty Images

The conventional wisdom has it that many U.S. oil producers can’t make money with oil prices below $85 a barrel. Here’s why the experts may be wrong

For U.S. consumers, there’s plenty to like about plummeting oil prices. After all, the cost of gasoline and home heating oil is falling dramatically as well. Since June, the price of WTI crude has dropped from about $101 a barrel to a recent price of $65, or roughly a 35% decline. And the average price of a gallon of unleaded gasoline in the U.S. has plunged to $2.76 from $3.27 a year ago, according to AAA.

But don’t falling prices threaten America’s fracking revolution? A lot is at stake. Since 2008, U.S oil production has risen from about 5 million barrels a day to more than 9 million—an 80% increase. As fracking boomed, the U.S. oil industry has helped the country become more energy independent and has created slews of high-paying jobs—President Obama, in fact, once said fracking has the potential to create as many as 600,000 jobs.

Conventional wisdom says the threat to fracking is real. “Tight” oil is the term the industry uses for petroleum produced through fracking because it comes from geological formations of low permeability, such as tight sandstone or shale. Tight oil has produced most of the growth in the global supply in recent years, and helped lead to the current glut. Experts have said that U.S. tight oil needs to sell at $85 or $90 a barrel to be profitable. With oil recently trading at $65, it looks like the industry is in peril.

The experts are right—up to a point. That $90 figure applies only to less than 20% of all “tight” oil fields. Says Jim Burkhard, the head of oil market research at IHS, a highly-respected industry research firm: “There’s a spectrum of break-even costs. Wells can perform differently in the same field.” A new study by IHS concludes that about 80% of the tight oil estimated to be pumped next year will still be profitable at between $50 and $69 a barrel.

Producers, it turns out, have gotten more efficient in designing and operating their fracking wells. Burkhard points to two factors at play. One is an increase in productivity due to a new technology called “super fracking,” where drillers pump a lot more sand into their wells when they fracture the oil shale. Productivity at some super-fracking wells has risen from 400 barrels a day to 600, lowering the break-even cost. The other factor is the oil service industries. Says Burkhard: “They’ve built up capacity over the past years. If there’s a decline in drilling due to low oil prices, we’ll see excess oil-drilling capacity and that puts downward pressure on the cost of producing tight oil.”

Lower oil prices, however, will slow the rate of growth of tight oil as energy companies grapple with market uncertainty and volatility. While today’s $65 a barrel might seem low, remember that in early 1980s, new production from the North Sea, Alaska’s North Slope, and Mexico drove prices down to $10 a barrel. And from the mid-1980s to September 2003, the inflation-adjusted price of a barrel of crude was less than $25.

With oil prices dropping, IHS estimates the growth in U.S. tight oil production will slow next year to 700,000 barrels a day, down from million a day in 2014. (That estimate is based on a $77 a barrel. If oil goes to $60 next year that 700,000 projection will be cut in half to 350,000.) Even so, the U.S. will still be adding a significant amount of new oil to a global market where demand is weakening. That makes any price spike— short of a blow-up in the Middle East or OPEC suddenly getting its act together—unlikely.

The fracking boom is maturing, but it’s not likely to go away any time soon.

This article originally appeared on Fortune.com

TIME Companies

Halliburton, Baker Hughes Merge in $34.6 Billion Deal

Halliburton to Buy Baker Hughes for $34.6 Billion
A flag with the Baker Hughes Inc. logo flies outside one of the company's facilities in Houston, Texas, U.S., on Monday, Nov. 17, 2014. Aaron M—Bloomberg/Getty Images

The merger will save the oil-drilling companies a combined $2 billion in costs

Two U.S. oil-drilling giants became one on Monday, when Houston-based companies Halliburton and Baker Hughes agreed to a $34.6 billion merger.

The deal came soon after talks between the two competitors broke down and Halliburton indicated the possibility of a hostile takeover of Baker Hughes, the New York Times reported.

Halliburton, controversial for its role in the 2010 Deepwater Horizon oil rig explosions, will retain its name in the new combined entity, and its chief executive and chairman David J. Lesar will take the helm.

The combination of the two companies’ resources, including operations and research and development, will save over $2 billion in costs and help them compete with industry leader Schlumberger.

Read more at the Times

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