Prohibiting Hydraulic Fracturing Would Shatter U.S. Economy

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If the U.S. prohibited hydraulic fracturing tomorrow the nation would lose massive amounts of jobs, investments, and domestic oil and gas reserves—both those proven today and others in the future, writes Paul Sullivan, professor of economics at the National Defense University and adjunct professor of security studies at Georgetown University. He adds that natural gas has been taking the place of coal in electricity production. Natural gas produces about half the carbon dioxide as coal in electricity generation, so there is an environmental plus to moving from coal to natural gas. Further, if the U.S. stopped hydraulically fracturing wells natural gas would become far more expensive. More coal plants would be developed given that coal would then become a far cheaper source of fuel. Electricity would also become more expensive.

“Fracking accounts for close to 50% of all natural gas and oil production,” he explains. “Our production of natural gas from shale fields and tight gas has increased by 40 billion cubic feet per day since 2002. Our production of shale and tight oil from fracking has increased by 4 million barrels a day since 2002.” Therefore, hydraulic fracturing is one of the main reasons why oil and natural gas prices are so low, and that makes it one of the main reasons why gasoline and diesel prices are so low, and electricity prices have dropped in some areas.

“We are now exporting LNG. Many LNG import facilities have been, are, and will be converted to export facilities,” he adds. “Our net trade of pipeline gas with Canada and Mexico has also greatly improved due to fracking-base unconventional natural gas production in our country. We are now often the largest producer of natural gas in the world—often beating the Russians at their own natural gas production game. Our exports of LNG can help our allies in Asia, most particularly Japan, and Europe become more energy secure. Our European allies can become less reliant on Russian gas, and will hence be less under the Russian thumb because we can send LNG their way.”

Sullivan also comments that the U.S. is also beginning to export crude oil. “For many years a large proportion of our trade deficit was due to importing crude oil. We have reduced that import bill massively by producing more oil in our country—and importing less. We are now more oil secure than at any time in our recent past. Our exports of oil can also help Asian allies like Japan and many countries in Europe become more energy secure.” He concludes that there have been amazing, positive changes in a short period of time thanks to hydraulic fracturing. “We should be grateful that shale oil and shale gas has helped dig us out of the 2008 Great Recession with jobs growth and the reduction in the cost of energy, and hence drops in the prices of things that use that energy to be made, transported, and more. With proper regulations and controls the potential environmental impacts of fracking can be controlled. The industry knows this and many in the industry are demanding proper regulation to keep the amateurs out who could ruin the whole business with mistakes.”

But what if the U.S. banned or severely limited hydraulic fracturing as some presidential candidates propose, and which many environmentalists demand? “Import costs would go up. Export revenues would go down. Inflation would go up. The economy would go down. Unemployment would go up, Sullivan maintains. “Standards of living would go down. Energy price shocks cause economic downturns. Stopping fracking would cause one of the biggest energy price shocks in the recent past. Who wants that?”

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