Sunday, February 26, 2012

Mututally Inconsistent Criticisms

I've noticed that the criticisms of natural gas E&Ps generally, and Chesapeake specifically, have started to include more arguments that are mutually inconsistent.

For example, bears will say that natural gas in the U.S. is so abundant that it is going to start getting flared. But then they will say that shale gas is an unsustainable scam and prices are going to spike again, so don't go building natural gas transportation infrastructure or GTL plants.

What this reminds me of is Treasuries last year, before the huge rally. The bond bears would say that it was bearish that the Federal Reserve was buying bonds in its quantitative easing programs (the "monetization" argument). But as that program was about to expire, they switched to saying it was bearish that the Fed was going to stop buying bonds (the "propping up the market" argument).

When someone argues Y because of X and -X, they are throwing arguments at the wall and seeing what sticks.

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