MIB: How The Financial Crisis Gave the World Fracking…

You probably know that the technology of horizontal drilling as one of many innovations associated with the “fracking” energy boom – using high-pressure injection of fluids to create cracks in the deep-rock formations through which natural gas and crude oil can flow.

What you may not have known was that the Great Financial Crisis was just as important to the fracking boom – perhaps even more so. This form of energy extraction process is so capital intensive it did not become cost-effective until after the Federal Reserve took rates down to zero, keeping them there for a decade.

So says Bethany McLean in her book Saudi America: The Truth About Fracking and How It’s Changing the World. She argues the entire fracking boom would not have been possible without huge amounts of extremely cheap capital.

McLean is also a contributing editor to Vanity Fair, and author of numerous books, including most famously Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. It was later made into an academy-award nominated documentary.

We also discuss how Wells Fargo’s ethical corporate culture was replaced with an aggressive sales culture that ultimately collapsed. The fallout continues to haunt Wells in terms of fines and bad PR.

Her favorite books are here; transcript of our conversation is posted here.

You can stream/download the full conversation, including the podcast extras on iTunesBloombergOvercast, and Stitcher. Our earlier podcasts can all be found at iTunesStitcherOvercast, and Bloomberg.

Next week, with David Hall, partner at Rise of the Rest Seed Fund where he is responsible for investment sourcing, execution, and oversight for Revolution portfolio companies.



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