Market Daily

Market Daily

Does Fracking Have a “Clean” Future?

“Oil shock” is officially no longer a historical term. While consumers panic at the pump, their governments confront an old truth: a lack of domestic energy supply is a national and global security issue. Soaring costs for developing, producing, transporting and refining crude oil are again pumping up inflation and interest rates worldwide, threatening a full economic recovery from the pandemic. However, with enormous North American oil and gas reserves available, public perceptions around the environmental impact of oil and gas development are the primary barriers to lowering energy costs. Fortunately, the oil and gas sector has been innovating to dramatically improve the environmental performance of the sector’s processes, like hydraulic fracturing.

Abundant Reserves, Scarce Supply
Canada has the third-largest oil reserves in the world, and its oil industry meets far higher environmental, social and governance (ESG) standards than almost any competing jurisdiction around the world. Nevertheless, although it is an ideal source of ethical supply for its own needs and export, domestic political barriers have stifled resource development, especially pipeline infrastructure. Unfortunately, for countries and consumers seeking cleaner oil options, this potential clean energy superpower imports oil from Saudi Arabia and other questionable suppliers, while most of its cleaner oil and gas industry has no direct access (aside from Newfoundland) to tidewater.

In the United States, energy dependence is also a result of domestic politics. US voters are increasingly concerned about carbon emissions, so the political establishment lacks the will to drill domestic oil resources. To avoid partisan roadblocks on the path to energy independence, the earth’s most significant and thirstiest economy needs to lower carbon emissions while increasing production.

However, as electric vehicles (EVs) have disrupted internal combustion engines, innovative energy service companies are now using technology to disrupt energy production with lower emissions.

Environmental Innovation
A great example of these innovators is RocketFrac Cleantech, a Canadian energy services start-up that uses rocket fuel as part of its process to stimulate reservoir production. Well-stimulating tight rock formations are usually done by hydraulic fracturing (more commonly known as ‘fracking’). However, RocketFrac Cleantech has developed proprietary innovations that allow the company to eliminate the use of freshwater, sand, and other additives in the well-stimulation process, getting the best of both worlds — stimulating production but with fewer carbon emissions and lower environmental impact overall.

The Calgary-based company’s approach can help move energy-rich countries like the United States and Canada closer to energy independence by improving the environmental performance of well-stimulation, addressing the concerns environmentalists have with conventional fracking’s carbon emissions, consumption of water, and risks of fracturing-induced earthquakes.

Specifically, the company uses a modest amount of solid rocket fuel as a propellant to create reservoir fractures. Deployed deeply within the earth, the rocket fuel replaces the millions of gallons of water and tons of sand used in conventional fracking. Side benefits include lower carbon emissions, water conservation, and a much smaller environmental footprint than traditional operations, which can employ dozens of people operating a fleet of trucks and other equipment.

“Compared to conventional hydraulic fracturing, our technology greatly reduces the environmental footprint required for energy production,” says RocketFrac Cleantech Interim CEO, Jim Vagher. “It requires far less personnel and none of the pumping equipment, and we don’t need to mine, transport, and consume the massive amounts of water and sand used in hydraulic fracturing. Combined, all of this dramatically reduces carbon emissions, and eliminates any hazardous fluid disposal.”

While propellant has previously seen limited use in fracking, RocketFrac Cleantech’s process is game-changing because its patent-pending tool design and proprietary fuel blend can generate forces sufficient to create radial fractures and replace millions of liters of water pumped overtime at very high pressure. An added benefit is that the gasses produced by the rocket fuel propellant process are already present naturally in the earth and are not emitted into the atmosphere.

Energy Transformation
Ultimately, Vagher expects RocketFrac Cleantech’s well-stimulation process to service primary forms of “green” energy, like hydrogen, which can be manufactured from natural gas. While hydrocarbons — composed of hydrogen and carbon — have been portrayed as a negative by some environmentalists, he notes that their components are far from harmful when managed responsibly and safely. Hydrogen, for example, can be used as a fuel that emits only water vapor, while carbon can be captured and used in manufacturing or construction; it can even be injected back into underground reservoirs rather than emitted into the atmosphere. When safely returned and stored in the earth, where they originally came from, greenhouse gasses from hydrocarbons do not affect the climate. In time, it will be possible for the entire oil and gas sector to be net-zero, or even net-negative, for carbon emissions, simply by deploying already proven technologies.

“We already have technology to capture any carbon emitted from hydrocarbon combustion, so it can be safely stored underground, be used to strengthen concrete, or be stored or used in other ways,” Vagher observes. “We know that all of our vehicles and energy generation can be Net Zero with such innovation, it is just a matter of getting the costs down over time.”

While RocketFrac Cleantech’s CEO sees significant EV growth, led by government incentives, in densely-populated areas of the western world, he says that combusting oil and gas will be necessary for decades to come. However, even as the percentage of hydrocarbons used in transportation is projected to decline, other industries, like mining and manufacturing, should more than pick up that slack in order to make durable, reusable products. Therefore, the focus will be on greater efficiency and reuse and honing innovative new technologies that reduce the environmental footprint of the sector we all depend on for things like tractors and fertilizer for agriculture or life-saving plastics for medical applications.

Vagher believes that oil and gas will be an important part of the energy mix for many decades to come, and the best approach we can take is to improve the environmental performance of the sector as much as possible, including dramatic carbon emission reductions. Much of the technology already exists to accomplish zero emissions; it is just not affordable enough for global adoption. Although, as with any new technology, cost reductions typically follow adoption rate and scale. RocketFrac Cleantech expects to go public this year with an eye on making its innovative technology help lead a new industry standard and improve overall energy efficiencies, regardless of source.

After all, oil shocks may be temporary, but RocketFrac Cleantech is betting that investors will see its technological progress as part of the longer-term solution.

NetChoice to sue California for new law

Tech behemoths like Amazon, Google, Meta, TikTok, and Twitter are part of the expansive industry organization NetChoice.

The group declared its decision to sue California on Wednesday.

They made the decision to overturn the Age-Appropriate Design Code Act, which the state recently enacted and which they think infringes on the First Amendment.

The Age-Appropriate Design Code Act

The laws in California were based on those in the UK.

It seeks to develop regulations to protect children online.

According to the Age-Appropriate Design Code Act, children must always have the highest level of privacy.

Furthermore, it requires that websites geared toward minors under 18 evaluate the potential for user exploitation or abuse.

The lawsuit

NetChoice’s lawsuit is a developing case that covers free speech online.

Legislators frequently want to reduce online platforms’ robust liability protections for user posts and content control.

Issues with content regulation and privacy affect all political parties.

Republicans and Democrats still disagree on the most effective approaches to resolving the problems.

NetChoice filed lawsuits against Texas and Florida for the social media regulations imposed by those states’ legislatures, even though most Democrats in those states’ legislatures supported the California statute.

The measure aims to hold tech companies accountable by mandating them to remove posts with political overtones.


According to NetChoice, the new law in California would hurt teenagers rather than protect them, the opposite of what it was intended to do.

They further claim that forcing companies to infer from customers the meaning of “inherently subjective terms” infringes on their First Amendment rights to free expression.

If the companies are in error, the state might apply crippling fines, claims NetChoice.

“The State can also impose such penalties if companies fail to enforce their content moderation standards to the Attorney General’s satisfaction,” said the group.

It’s projected that the Age-Appropriate Design Code Act will go into force in July 2024.

In order to avoid paying fines for producing content that California deems detrimental, the bill will reportedly require content producers to cut their output significantly.

“The over-moderation will stifle important resources, particularly for vulnerable youth who rely on the Internet for life-saving information,” said NetChoice.

Read also: Mortgage application shows positive movement amid falling interest rates

Defense of the law

Despite the criticisms, an attorney for California Attorney General Rob Bonta defended the legislation.

According to the statement, the policy offers additional protections against gathering and using children’s data.

It also discusses a few undeniable adverse effects of social networking and other online goods and services.

“We are reviewing the complaint and look forward to defending this important children’s safety law in court.”

Prior concerns

The lawsuit’s phrasing is similar to a bipartisan federal bill that is being opposed by civil society organizations but seeks to protect minors online.

The organizations voiced concern that the bill would enhance the danger posed by youngsters and teenagers.

The following groups were among those opposed to the legislation:

  • The American Civil Liberties Union
  • Center for Democracy & Technology
  • Electronic Frontier Foundation
  • Fight for the Future
  • Glaad
  • Wikimedia Foundation

The organizations warned over the bill’s possible adverse effects, particularly on the rights of the LGBTQ community.

Political attitudes’ potential to influence the criteria employed by content censors is already causing alarm among residents.

The bipartisan bill

Websites likely to be accessed by kids under the age of 16 would have to comply with the law’s standards.

Therefore, it would be their duty to lessen the possibility of young users suffering bodily or psychological harm, particularly by promoting the following:

  • Self-harm or suicide
  • Encouragement of addictive behavior
  • Enabling online bullying
  • Predatory marketing

“KOSA would require online services to ‘prevent’ a set of harms to minors, which is effectively an instruction to employ broad content filtering to limit minors’ access to certain online content,” wrote the groups.

“Online service would face substantial pressure to over-moderate, including from state Attorneys General seeking to make political points about what kind of information is appropriate for young people.”

“At a time when books with LGBTQ+ themes are being banned from school libraries, and people providing healthcare to trans children are being falsely accused of ‘grooming,’ KOSA would cut off another vital avenue to access to information for vulnerable youth.”

Revamping the federal bipartisan bill

In a revised version of the Act, the relevant parliamentarians tried to remedy the issues.

Updates that addressed concerns voiced by the LGBTQ community and major parliamentarians were made public on Tuesday night.

A modified “duty of care” clause was included to allay concerns that attorneys general with anti-LGBTQ attitudes would misuse the law.

Additionally, a clause stating that businesses were not required to gather more user data to ascertain the user’s age was changed.

Despite the modifications, several groups continued to oppose the law.

Read also: Meta plans to pull news content out if bill pushes

Content moderation

NetChoice is against the laws in Florida and Texas, saying it could weaken Section 230 of the Communications Decency Act, which shields the tech industry from legal culpability.

The Act protects the right to manage content.

Republicans, on the other hand, have been working to implement more social media laws because they think that mainstream websites are stifling conservative viewpoints.

When this has happened, well-known websites have denied arbitrarily enforcing their community norms.

A credible study found that conservative opinions frequently predominate in online exchanges.

The Supreme Court in May halted the implementation of a Texas version.

However, no decision was made about the case’s merits.

Florida’s version has thus far been dismissed by lower courts.


Tech industry group sues to block California law designed to protect kids online over free speech concerns

Kids Online Safety Act may harm minors, civil society groups warn lawmakers

Revamped kids’ online privacy bill emerges in year-end push (1)

Mortgage application shows positive movement amid falling interest rates

As homeowners and prospective buyers look for cheaper mortgage rates, the number of mortgage applications is steadily rising again after months of declines.


The Mortgage Bankers Association’s seasonally adjusted index shows that applications rose 3.2% over the prior week.

The average contract interest rate for conforming 30-year fixed-rate mortgages increased last week from 6.41% to 6.42%.

The points for loans requiring a 20% down payment consequently increased from 0.63 to 0.64.

Since last month, rates have been declining as a result of government reports that inflation is reducing.

Tuesday interest rates

After the release of the November consumer price index on Tuesday, interest rates went down.

According to Mortgage News Daily, the average rate for a 30-year fixed mortgage was lowered to 6.28%.

The rate is currently at its lowest since the middle of September.

The drop coincides with the consumer price index for November showing a less-than-expected reading.

Investors flocked to US Treasury bonds following the study’s publication, which decreased yields.

Bond market

“The second consecutive month of reassuring CPI data continues to build a case that inflation has turned a corner,” said Matthew Graham, the CEO of Mortgage News Daily, on Tuesday.

“But rates will be careful about reading too much into that potential shift given the volatility of the data in recent months.”

“The bond market will also want to see what the Fed does with this info in tomorrow’s updated Fed rate forecasts in the dot plot.

Read also: Mortgage rates to remain the same this week as Fed prepares for rate hike

Rate movement

Beginning in January 2022, mortgage rates rose, ramping up speed throughout the spring and summer.

By the end of October, the 30-year-fixed had risen from roughly 3% to almost 7%.

According to the National Association of Realtors, existing home sales have been falling for nine consecutive months and down by 24% in October compared to the same month last year.

However, rates decreased sharply in November due to the October CPI’s weakening inflation signal.

November’s final rate came out to be 6.63%.

Some hesitantly suggested that the lower pricing might lure buyers back to the marketplace.

On the company’s quarterly earnings call with investors, Doug Yearley, CEO of luxury homebuilder Toll Brothers, acknowledged the temporary rate reduction in August.

“There are some very very modest green shoots over the last few weeks, as rates have come down,” said Yearley.

“But I am not ready to get sucked back into the conversation we had in August when we felt better.”


Real estate company Redfin claims that in November, homebuyers’ demand started to rise.

The demand index for the company went up 1.5% from a month ago.

However, it was also down 20% from the same time last year during the four weeks that concluded on November 27.

“There have been a handful of pieces of relatively good news for the housing market lately, but we’re far from out of the woods,” said Taylor Marr, the deputy chief economist for Redfin.

“Key indicators of homebuying demand will likely be teetering on a knife’s edge with every data release that comes out related to the Fed’s path to eventually bringing rates down.”

Rate locks

The optimism did not lead to higher mortgage rate locks for homebuyers, which generally indicate future home sales.

Black Knight, a provider of mortgage technology and data, reports a 22% decrease in rate locking from October to November.

Additionally, this year compared to last, there were 48% fewer rate locks.

“It’s still extremely unaffordable even with rates coming down, even with prices coming down in each of the last four months,” said Andrew Walden, the vice president at Black Knight.

“We’re still less affordable than when we were at the peak of the market in 2006, and you’re seeing that play out in the rate lock numbers.”

Walden underlines once more that the inventory is still 40% below ideal levels despite the homebuilders’ ongoing retreat and the scarcity of motivated sellers.

Prices and rates are still much higher than they should be in comparison to wages that, by historical standards, make housing affordable, notwithstanding dropping prices and rates.

“As we move throughout 2023, you’re going to see prices continue to soften. You’re going to see incomes hopefully continue to grow and eat up some of that gap,” said Walden.

“I think, likely, we are going to see rates come down from where they are today, but it’s going to take an extended period of time to get there.”

Mortgage applications

Last week, there were 3% more mortgage applications to refinance home mortgages.

Despite this, they were 85% lower than they had been the previous week.

The rates fell from a high of over 7% in October, which increased the small pool of possible borrowers who could benefit from a refinance.

For the week, there were 4% more house purchase applications than the week before, which is 38% fewer than in 2021.

The annual comparison is currently decreasing as rates fall.

Joel Kan, an MBA economist, said in a press release:

“The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months.”

Read also: The stock market gets a good start in October as the market rallies

Rates and demand

Because of the decline in demand brought on by lower interest rates, adjustable-rate mortgages are now an option.

From 13% in October, applications for ARMs decreased by 7.7% last week.

ARMs involve a more significant risk despite having lower rates because they switch to the current market rate after their fixed maturities.

Mortgage rates dropped after the release of the CPI data on Tuesday, but they can spike again after the Federal Reserve announces its most recent interest rate change on Wednesday.

“A friendly enough Fed could easily break the range, but we have our doubts as to how much fuel the Fed will want to add to the fire,” said Mortgage News Daily chief operating officer Matthew Graham.

“If anything, the Fed is more likely to try to temper the exuberance because the exuberance is counterproductive to the Fed’s goals.”


Mortgage rates drop after CPI report, but the housing market is far from out of the woods

Mortgage demand inches higher as interest rates move lower