Recent energy-related news has been dominated by stories of shortages of, well, everything. Oil prices have risen into the mid-$90s per barrel as demand far outstrips supply. Global supplies of diesel are dwindling as the refining sector struggles to meet demand.
Natural gas prices in the United States have risen by 25% in the last week, owing mostly to Europe’s need for the commodity, which is causing shortages in Asia and other regions of the globe. We hear on a regular basis about supply constraints affecting major minerals such as copper and lithium, as well as commodities like steel and aluminum, all of which are crucial components for supporting the supply of fossil fuels and renewables.
In addition to all of these mineral shortages, it seems that the domestic US oil and gas sector may also add frac sand to its list of minerals in limited supply. According to Reuters, drillers in the Permian Basin and elsewhere are having difficulty procuring enough of the material to keep their fracking projects on track.
According to Rystad Energy, spot rates for high-quality frac sand are currently between $50 and $70 per ton, which is two to three times what drillers were paying in 2021. Artem Abramov, a Rystad Researcher, believes that restricted supply will drive up sand prices in the next weeks and months.
Rising oil prices have prompted several analysts, including the US Energy Information Administration (EIA), to anticipate that the US industry will be able to increase domestic oil output by up to 1 million barrels per day by 2021. However, a frac sand scarcity, if it persists, would certainly put a damper on such conjecture.
Along with Saudi Arabia and the United Arab Emirates, the United States is one of just a few major oil-producing countries with the present ability to dramatically increase output in the face of growing oil demand. If its future expansion is hampered by a scarcity of frac sand, among other factors such as ESG investors and the Biden administration’s initiatives, it will have global ramifications.
The increasing scarcity of all of these commodities, whether they are fossil fuels or essential minerals required to support the spread of renewables and electric cars, threatens to halt the global agenda centered on the “energy transition,” according to Oilprice.com. The basic fact is that the manufacture of wind turbines, solar panels, and electric vehicles requires a significant amount of energy produced by coal and natural gas.
Today’s world cannot create an appropriate supply of one without abundant and inexpensive supplies of the other. Unfortunately, it is a fact that supporters of the transition have failed to sufficiently address while they have pushed so hard in recent years to restrain those fossil fuel businesses. One of the primary causes for the world’s astonishing increase in energy expenses over the last year has been a failure to adequately prepare.