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Pump jacks in an oil field over the Monterey Shale formation on March 24, 2014 near Lost Hills, California. (David McNew/Getty Images)

The Problems With Fracking...And the Benefits

Irwin M. Stelzer

The fracking euphoria had to end. For three reasons. First, the claims for its benefits were wildly exaggerated, ensuring eventual disappointment as even a cheerful reality could not meet the imaginings of the pro-fossil-fuel gang. Second, environmental groups were not going to sit idly by, their formidable political weapons holstered, while fossil fuels received a new lease on life in America. Third, as has always been the case, the oil and gas industry, abetted by the railroads that have to move the stuff in the absence of adequate pipeline infrastructure, were insufficiently attentive to some of the problems involved in the production and transportation of the enormous gas and oil reserves made available by the new application of what is an old technology.

Not that fracking has not brought huge benefits to American industry. The processes of drilling for and extracting the newly accessible reserves has created hundreds of thousands of jobs, both directly and indirectly-the latter in the industries that feed, house and service the oil field workers. The abundant supply of natural gas has kept prices so low that the harsh winter’s blow to the pocketbooks of customers of many U.S. utilities has been softened. Perhaps more important, relatively low-cost natural gas is attracting manufacturing industries to America from Germany, Chile and other countries, and positioning us to become a major player in the emerging globalised market for natural gas. And someday might even put the U.S. in a position to become such an important source of natural gas that countries now dependent on Putin’s Russia might find themselves with a bit more foreign policy independence and spine than they currently display.

The fact that U.S. production of oil has increased 44 percent since 2013 might not promise the “energy independence” that presidents since Richard Nixon professed to be able to deliver, but it does make America less dependent on supplies from unstable and unfriendly countries such as Libya and Nigeria, and less subject to sharp price spikes that in July 2008 took the price of a barrel of crude to $147. In fact, the danger now facing the domestic oil industry is that oil prices might drop sharply. The re-emergence of Iraq as a major producer, increased production from Mexico and other countries now more welcoming to foreign investment, and the revival of Iranian exports as sanctions are eased, likely even in the absence of a nuclear deal with the mullahs, could drop prices of this internationally traded commodity below the $100 per barrel that frackers claim they need to continue exploring and producing. Besides, oil shale production is expected to decline early in the next decade, increasing U.S. reliance on imports. Talk of Saudi America is premature.

Add to the precarious price position of America’s frackers the accelerated onslaught of the greens. Environmental politics has always trumped environmental economics, and fracking is no exception. Those leading hydrologists – Lady Gaga, Yoko Ono, and Sir Paul McCartney – have persuaded New York governor Andrew Cuomo to prevent fracking in economically depressed upstate New York State lest the water supply be contaminated. Greens opposed to the production and use of any fossil fuels have been emboldened by the recent National Climate Assessment’s conclusion that malign climate change is already upon us to renew their efforts to weave a regulatory web around fracking. If what the President calls “the settled science of climate change” is indeed settled, and the consequences of climate change are already visible in both droughts and floods, in both heat waves and cold winters, surely it is not in the interest of the U.S., indeed the world, to allow fracking to add to reserves of the fossil fuels that are causing these problems. Especially since the production process itself compounds the ill effects of the consumption of fracked oil and gas. So say many environmentalists.

Just as the virtues of fracking, real though they are, are overstated by the oil and gas industry, so are its vices when recited by the green lobby. Yes, there seems to be evidence that oil obtained by fracking is more volatile than oil produced the good old-fashioned way; that rail transport is more dangerous than pipeline shipment; that methane does seep from the equipment used in fracking and might be a more troublesome greenhouse gas than CO2; that large amounts of contaminated waste-water are created; and that the flaring of excess natural gas does not exactly improve the environment. But there is also evidence that the industry is addressing these problems by:

  • re-using waste water, or treating it to make it usable for other purposes,
  • building safer railroad cars, tailor-made to handle fracked crude oil,
  • reducing methane seepage, by wider use of technology that has reduced leakage by 80% in a Wyoming field, and
  • putting natural gas that is now being flared for lack of adequate pipelines from places such as North Dakota’s Bakken Shale, to productive uses by deploying mobile natural gas compression and delivery systems.

Mark Brownstein, who heads up the natural gas monitoring group at the very green Environmental Defense Fund, tells the Wall Street Journal, “With the right technology, the right management practices and the right regulations properly enforced, there are things we can do to reduce the risks that are associated with unconventional oil and gas development.” Other environmentalists’ faith in the onward march of technology in the renewables sector fades when they view the fossil fuels industries.

All of this proves that making energy policy is no easy chore. There are both benefits (more rapid economic growth and reduced household drudgery as electricity replaces elbow grease) and costs (CO2 emissions) from the production and use of energy, just as there are benefits (food on the table) as well as costs (methane emissions) from breeding cows and pigs. Yes, energy production could theoretically be reduced to what we can wring from the sun and the wind, and agricultural production to stuff that vegans prefer. The consequences of such moves on economic and gastronomic well-being would surely be unacceptable, even if feasible.

President Obama wants to take credit for the jobs and growth created by fracking, while at the same time assuring his green base that fracked natural gas is merely a “transition fuel” to a renewables future, useful now as a replacement for coal in electricity generation, but neither clean enough nor abundant enough to meet America’s long-term energy needs. The probable date for the end of that transition: never.

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