The following by Bernard L.Weinstein of SMU first appeared in the May 1, 2016, edition of The Washington Times. Weinstein is an economist, associate director of SMU's Maguire Energy Institute and an adjunct professor of business economics in SMU's Cox School of Business.
May 5, 2016
By Bernard L. Weinstein
Last year, oil production in America reached a record 9.2 million barrels per day while imports dropped to their lowest levels in decades. Natural gas output also achieved a new high. And, for the first time, hydraulically fractured wells accounted for more than half of U.S. oil and gas production.
Unfortunately, the economic and strategic benefits from having achieved virtual “energy independence,” thanks to the shale revolution, have been either ignored or dismissed by President Barack Obama. What’s more, in pursuit of its climate agenda, the administration is making it more difficult and expensive to extract domestic oil and gas. The cancellation of offshore lease sales and proposed regulations to further limit methane emissions at well sites are but the most recent examples.
Even more serious, we’re now hearing a rising chorus of politicians and pundits calling for a total moratorium on hydraulic fracturing. Fracking is currently banned in the states of Maryland, New York and Vermont, while several hundred municipalities have either prohibited or restricted its use. Democratic presidential candidate Bernie Sanders wants to ban fracking nationwide, and in a recent CNN debate, candidate Hillary Clinton stated that “By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” Bill McKibben, a leading environmental activist, not only calls for a ban on fracking but argues that “Coal and oil and natural gas have to be left in the ground. All of them.”
What would happen if we actually banned fracking? Mr. Sanders and Mr. McKibben might argue that investments in wind, solar and biofuels could offset any production shortfalls; but such a transition would take decades and require hundreds of billions of taxpayer dollars. More likely, we’d see a huge jump in imports that would worsen our trade deficit while putting our energy security in the hands of OPEC and Russia. At the same time, tens of thousands of high wage American jobs would disappear.
Contrary to the claims of Mr. McKibben and other “anti-frackers,” hydraulic fracturing, a technology that has been used to complete more than one-and-a-half million oil and gas wells over the past 60 years, does not contaminate groundwater or cause earthquakes. Comprehensive studies by the Environmental Protection Agency (EPA) and Duke University researchers have concluded that hydraulic fracturing does not pose a credible threat to drinking water. As for earthquakes, scientists at Stanford University and Southern Methodist University have demonstrated that seismic activity near oil drilling operations is not caused by the drilling or fracking process itself but is probably related to the disposal of waste water in deep rock formations close to drill sites. This calls for increased recycling of waste water, among other cost-effective solutions, not banning fracking.
Critics of hydraulic fracturing are either unaware of its economic and environmental benefits or are simply using fracking as a stalking horse for other agendas. Thanks to the repeal of the oil export ban, America is becoming a player in the world market while net imports continue to fall, strengthening our nation’s energy security. The huge increase in our natural gas production over the past decade has actually been a plus for the environment. For example, the Intergovernmental Panel on Climate change recently noted that an “increased and diversified gas supply is an important reason for a reduction of greenhouse gas emissions in the United States” while the International Energy Agency observed that natural gas is a “valuable component of a gradually decarbonizing electricity and energy system.”
As long as gasoline remains cheap and available, which seems likely in view of OPEC’s failed initiative to negotiate an oil production freeze, energy policy is not likely to be a major issue in this year’s presidential election. But efforts by some politicians, environmentalists and pundits to “tar” the oil and gas industry as an evil worse than tobacco ignore basic economic, environmental and geopolitical realities.
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