Hydraulic Fracturing: The Controversial Future of US Oil Production
January 14, 2014
Author: Alexander Gray, W’17 C’17
While at my family home in Kentucky, over the holidays, I found myself in a discussion with a neighbor about the issue of hydraulic fracturing— more commonly known as “fracking.” My neighbor declared his opposition to fracking, regardless of its alleged ability to reduce the US’ dependence on foreign energy, and its said capacity to lower costs for American consumers. He was primarily concerned with its impact on the environment. As I asserted that energy policy was a great interest of mine, and recognized that energy, specifically coal, is central to Kentucky’s economy, I felt embarrassed that I lacked sufficient knowledge to take a stand on the issue.
Currently, hydraulic fracturing plays a key role in the energy future of the United States, and is an issue that creates much divergence between the realms of ethical responsibility and economic gain. Hydraulic fracturing is a method of underground well stimulation that extracts resources like oil, natural gas, and water. Generally, water and chemical additives are pumped at a high pressure into underground shale formations, thus fracturing rocks to extract natural resources not otherwise accessible by traditional drilling methods.[i]
With 25% of American natural gas currently originating from shale beds, as a result of fracturing, when just 1% of these resources initially originated from this alternative source in 2000, many negative externalities have been attributed to our nation’s increased use of this method. For example, fracking has been said to cause carcinogen discharge in drinking water, and greater amounts of air pollutants, which contributes to our growing problem with greenhouse gases.[ii]
Furthermore, the Clean Water and Energy Acts of 2005 specifically exempts hydraulic fracturing from being penalized for common wastewater disposal, and allows energy companies to dump their used chemicals and other liquids into the ground.[iii] While I now have a more thorough understanding of my neighbor’s argument, proponents indicate that there are greater consumer benefits for such exemptions.
For example, private sector investments, in fracking, is predicted to yield $346 million between 2012 and 2025— with $31 billion going towards chemical and plastic manufacturing in America. Additionally, household disposable income is expected to grow by $2700 in 2020, and $3500 in 2025, because of lower energy prices caused by fracking.[iv] Workforce participation has also increased as a result of the revitalization of the domestic oil and gas industry as the sector has added nearly 200,000 jobs between 2003 and 2012. Peripheral industries like chemicals and electricity have also benefitted indirectly as oil companies have demanded more factors of input with their own greater output.[v] Total economic exposure of fracking is anticipated to touch 4.2% of the manufacturing sector by 2025.[vi]
But, consistent with my neighbor’s beliefs, the environmental harm caused by fracking may outweigh its financial benefits. First and foremost, water contamination has been a primary issue regarding the safety of fracking. Because of industry practices, and reduced guidance under the Energy Policy Act, such that they do not have to disclose the chemicals used in fracking, energy companies have not needed to strictly comply with the guidelines established under the Clean Water Act.[vii]
Furthermore, the sheer quantity of water demanded by fracking has caused tension among energy companies. In Texas, the water required to fracture a single oil well could cost as much as $50,000, and the market for water is becoming increasingly competitive as oil companies are attempting to secure new rights to aquifers that are able to supply water to a quarter of a million people per year—40,000 sq ft acres. Due to tight water supplies, at least 964 public water systems have placed usage restrictions on customers.[viii]
Although there are few questions about whether fracking affords the U.S. some economic benefits, a commitment to environmental safety remains a central concern of many. To ensure its future growth, big oil companies have demonstrated a commitment to environmental safety. In fact, as it has become more popular among major energy companies in America, the rate for violations has steadily decreased, and larger firms have been more compliant than smaller ones.
For example, Shell, Exxon, BP, and Chevron’s safety records for fracturing operations reveal that they have only been cited with environment safety violations 6% of the time, as compared with 14% of the mid-sized oil companies (those with market capitalizations between $2 billion and $50 billion), and 17% of the smaller companies with a market capitalization of less than $2 billion.[ix]
Because it is highly unlikely that the economic benefits of fracking, along with the safety and regulatory commitments of big oil to protect the environment, will quell the concerns of some skeptics, the government should impose greater restrictions on the practices involved in fracking that could harm the environment. For example, the federal government could impose more stringent wastewater disposal requirements on all companies who rely on fracking.
Similarly, because big oil’s commitment, and proven track record of safety and environmentally responsible disposal of wastewater stands to be heartening, smaller producers should follow the lead of their larger contemporaries. While hydraulic fracturing is our present reality, finding a better alternative must be our ultimate goal in securing energy independence in the U.S.
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