EARTHblog » Deborah Rogers
May 3, 2012
We have been watching the demise of Chesapeake Energy (CHK) unfold. In addition to the news of $1.1 billion in unreported loans, Reuters has now exposed a $200 million hedge fund which Aubrey McClendon ran from the headquarters of Chesapeake Energy. This hedge fund invested in the same commodities that Chesapeake produces. Further, Senator Nelson has now called for an investigation by the Department of Justice to look into possible fraud and price manipulation.
The issues of corporate governance, potential fraud, the use of off balance sheet financing and the complexity of financial engineering has been nothing short of breathtaking. But I think we need to step back and examine the full import and implications of shale gas economics because Chesapeake may simply be a microcosm of a more systemic anomaly which is much broader and more problematic.