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Hydraulic Fracturing: The Controversial Future of US Oil Production

January 14, 2014
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. 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.

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]


Interactive Visual of the Hydraulic Fracturing Water Cycle from the EPA

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.


  [i]Caserta, Maxwell. “What Is Fracking?” Hydraulic Fracturing in the Lehigh Valley. Lafayette College, 18 Nov. 2011. Web. 23 Dec. 2013.

  [ii]“Is Fracking a Good Idea?” US News. U.S.News & World Report, n.d. Web. 23 Dec. 2013.

  [iii]“Regulation of Hydraulic Fracturing Under the Safe Drinking Water Act.” Water: Hydraulic Fracturing. Environmental Protection Agency, 4 May 2012. Web. 20 Dec. 2013.

  [iv]Efstathiou, Jim, Jr. “Fracking Boom Seen Raising Household Incomes by $1,200.”Bloomberg.com. Bloomberg, 4 Sept. 2013. Web. 23 Dec. 2013.

  [v]Hassett, Kevin, and Aparna Mathur. “American Enterprise Institute.” Benefits of Hydraulic Fracking. American Enterprise Institute, 4 Apr. 2013. Web. 23 Dec. 2013.

  [vii]“Fracking: Laws and Loopholes | Clean Water Action.” Fracking: Laws and Loopholes | Clean Water Action. Clean Water Action, n.d. Web. 23 Dec. 2013.

  [viii]Gold, Russell, and Ana Campoy. “Oil’s Growing Thirst for Water.” Wsj.com. The Wall Street Journal, 6 Dec. 2011. Web. 23 Dec. 2013.

  [ix]Gilbert, Daniel, and Russell Gold. “As Big Drillers Move In, Safety Goes Up.”Wsj.com. The Wall Street Journal, 2 Apr. 2013. Web. 23 Dec. 2013.

 

 

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  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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