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Analysis of the Economic, Environmental and Political Effects of FrackingZach CohenIntroductionFracking, or hydraulic fracturing, is the process of extracting natural gas from shale rock. Fracking allows the world to retain natural gas from depths that were deemed unreachable by conventional technology. Recent advancements in Fracking technology have?propelled America to the forefront of natural gas extraction. By this method, the shale rock is punctured with a high pressure fluid, causing it?to rupture and allow the movement of petroleum and brine. After the fluid fractures the rock, the pressure is removed as well,?and small pieces of aluminum oxide (hydraulic fluid) hold the fractures open. The shale rock, permeable to all natural gases, then is available for extraction.?Fracking has endless possibilities, Chief executive officer of Chesapeake Energy Corporation Aubrey McClendon said, “Natural gas is the one fuel that we have that's affordable, it's scaleable, it can replace coal over time, it can replace imported oil, can create American jobs”.It is?clear that Fracking is a ground breaking technology. However,?Fracking is a?rather controversial?topic, as?economists?and environmentalists?debate?whether the economic gains outweigh the detrimental effect it has on the environment. Fracking enables?America to be the third largest producer of petroleum and brine in the world since it tripled domestic gas?production over the last ten years, thereby, allowing the US to be?less oil dependent on other countries.? On the other hand, Fracking is destructive to the environment since?it releases carcinogens and toxic chemicals?and pollutes the?drinking water in proximity to the plant.?HistoryInjecting fluid to stimulate shale rock has existed?since the 1860s. In 1930, there were initial attempts to inject non explosive fluid into the shale rock which allowed natural gas to leak out. Approximately?twenty years later, the first hydraulic fracturing of wells was introduced by Stanolind Oil. However, after two years, Halliburton Company became the first company to fracture at an industrial level. It was not until 1974 that the government started to regulate the pollution level of drinking water. Congress stated that fracking does not contaminate water and does not negatively affect the environment. In 2000, present day fracking technology was introduced and put into effect in Texas. Five years later the fracking boom started after the Environmental Protection Agency ruled that it is not allowed under their power to investigate a natural gas company. However, in?2010, the government broke their laissez-faire policy with oil extraction, and is currently investigating the impact of hydraulic fracturing on the environment.?Economic Advantages?The Fracking technology is responsible for the increase in?oil and gas production.? In 2011, the US?produced 8,500,983 million cubic feet of natural gas from shale gas wells, a value of about $36 billion, due to shale gas alone. America is now the world’s largest?producer of natural gas. As a result,?imported gases compose merely?eight percent of total natural gas consumption in the United States. Since America does not rely on imported gas, the United States has balanced it trade as the US'?domestic supply has grown to meet its demand. Business magnate T. Boone Pickens simply stated, “Natural gas is the best transportation fuel. It's better than gasoline or diesel. It's cleaner, it's cheaper, and it's domestic. Natural gas is 97% domestic fuel.” Hydraulic fracturing has also?created thousands of new jobs across the country. In total, hydraulic fracturing directly and indirectly has been responsible for employing over 850,000 employees. In 2020, it is projected that smart drilling will employee 1.5 million employees. These onsite jobs on average pay more than twenty nine dollars per?hour. This average rate exceeds the national rate by sixteen percent. Additionally, hydraulic?fracturing?enables?the American public to access energy at a much lower cost.? Thus,?Fracking has a very?positive effect on the American economy.? However, some environmentalists?think that this will lead to the abuse of?energy and other detrimental effects. Environmental Damages?Hydraulic Fracking negatively affects the environment in many different ways. Fracking contaminates the drinking water in the proximity of the?Fracking plant.?Fracking also pollutes the air with methane,?exposes?people to toxic chemicals and?has an impact on the climate. Fracking increases the risk of babies born with?low birth weight by more than half, numbers comparable to the Chernobyl disasters. Fracking?produces?an?extreme amount of waste?that taints the area in which it?is disposed.?Fracking is also an extremely dangerous?job, as?there are over 50 onsite deaths per?year. Fracking employees are vulnerable to many diseases due to the chemicals used. Dr. Kenneth Rosenman stated, “Air sampling results show that the majority of silica levels at hydraulic fracturing sites were above the Occupational Safety and Health Administration allowable standard and 84% were above Occupational Safety and Health Administration’s new proposed standard. These exposure levels put workers, particularly sand mover operators and T-belt operators who had the highest levels, at risk of silicosis and the other silica-related conditions.” Countries all over the world have banned this?extraction practice, and even?certain districts within the US?have banned Fracking.?After the process of fracking is finalized, liquids that were injected into the ground “flow back” to the surface. This wastewater, called “flowback,” can contain poisonous substances that can rise up to the surface and infect nearby wildlife and civilization. These toxins, include, arsenic, barium, lead, mercury, and radioactive elements like radium.Social + Environmental + Political Benefits?Despite such risks, if Fracking is executed properly, it?can be argued to benefit the environment. Fracking can emit?less carbon emissions than regular gas drilling. This is reinforced by Exxon Mobile CEO, Rex W. Tilerson: “Natural gas obviously brings with it a number of quality-of-life environmental benefits because it is a relatively clean-burning fuel. It has a CO2 footprint, but it has no particulates. It has none of the other emissions elements that are of concern to public health that other forms of power-generation fuels have: coal, fuel oil, others.” Fracking on a national scale has increased our national safety. Since?the United States has become?less oil dependent, it is no longer?forced to have a friendly relationship with corrupt countries. Many fracking experts predict that America will be energy self-sufficient by 2030.?Political DebateFracking also has had a great impact on politics and has become a common topic in?political discussions.? A majority of politicians find it difficult to oppose Fracking because of its clear?positive effect?on the economy. Even in the most environmentally aware states, politicians find it hard to pass a moratorium on fracking. However, fracking still remains an unsettled issue in many states in America.?Utilitarian PlansMany Americans think that taking a utilitarian approach to fracking is the best solution to this ongoing debate.? While?Utilitarianism attempts?to maximize the good of an action for the most number of people, Fracking can still?impinge on the rights of a minority stakeholder or an individual. The debate can be better understood by considering two extreme plans of implementation of Fracking.The first plan is?to allow the Fracking industry to frack anywhere they desire without government regulations or oversight. Based on the honor code, the fracking company would take as many measures as?possible?to reduce water contamination, and other negative effects?of fracking. By trusting the fracking companies, a great deal of money will be saved. The companies will not have to pay for?water monitoring systems and other systems designed?to protect the environment will not have to be used. This would greatly decrease energy and gas prices, setting the prices at an all-time low. This would also allow us to be the largest?gas producer in the world by 2019.?This plan can increase fracking jobs and lower energy costs, which would benefit?the American public.? However, Fracking?would lead to enormous spikes in pollution,?would damage nearby bodies of water?and contaminate?aquifers and?decrease the property value of homes nearby the plant. This utilitarian approach would consider the economic gains to benefit the majority, and the environmental losses only impinge on a small minority.?The other?plan would have full state government intervention and regulation of fracking. Such regulations?would make Fracking?so expensive to perform that it?will no longer be a cost effective extraction process and Fracking will gradually come to a halt. The state government?will?limit the number of fracking sites per state and each?fracking company will have to pay a 5% royalty to the United States Environmental Protection Agency.? If carcinogens or other toxic chemicals are given off and pollute the air or water, the fracking plant will immediately be forced to close down and?will need to reimburse all damages it?causes.?This plan will lead to great inflation in?prices of energy and gas and?will limit the US'?oil exportation, forcing?America to be almost as oil dependent on other countries?as they once were before hydraulic fracturing. However, this plan will reduce all environmental harms caused by fracking. Water contamination and toxins in the air will be eliminated due to regulated fracking within the respective state.?Combination Plan?Both of these?plans?are too radical and will never be executed by the government.? A?possible combination of these two extremes, can be formulated which would be mutually beneficial to both sides of the debate. As politician Bill Richardson stated, “Fracking is doable if there's full disclosure of all chemicals used. Secondly, science dictates the policy rather than politics. Third, there's collaboration between environmental groups and the natural gas industry”. This plan would allow fracking but would limit the amount of fracking sites in a given state. The number of fracking zones allowed will be?based?on population and amount of shale rock available. For every 75,000 people in the state one fracking plant will be?allowed. However, if there is an abundance of shale rock in a particular?area, the?fracking company will be permitted?to propose a safe extraction process in that?area. If their proposal is accepted, then regulating?rules will be suspended.? The?proposal, however,?can be rejected if the government thinks that it will hurt the people more than it will help them. There is also an incentive system built into this plan. If the fracking companies are able to prove that they have caused no environmental damage at all in a span of a year then the?population to fracking plant ratio will decrease by 2,000 people per year. This program will force the companies to be extra cautious with their excretion of waste and other negative effects?of the?process that can hurt the environment.Geopolitics of FrackingNot only can Fracking benefit America by reducing its reliance on other countries, it can also enhance the United States economy by exporting excess supply to other countries. Since the fracking boom, 1970’s production has been tripled, and in 2030 the production will triple 2010 production (9 million barrels per day). For the last forty years the United States has put a ban on oil and natural gas exportation. The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. OPEC's objective is to coordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations, and a fair return on capital to those investing in the industry. The United States restricted oil exportation in the 1970’s in response to the OPEC cartel cutting production, which drove up fuel costs for all Americans. If the United States would lift the ban there would be numerous geopolitical changes, in addition to positive economic outcomes, such as boosting domestic oil production and cutting gasoline prices. The shale boom has given America a luxury of having an excess supply of oil. The US producers of oil would be able to sell crude oil at a higher cost into the global market than in the domestic market. Additionally, if the ban is lifted it will affect international politics. If the United States were able to sell crude oil to Europe for a projected $9.64/m British Thermal Units, it would give Europe access to cheap gas, and Europe would no longer be dependent on Russia for oil. If Europe is no longer dependent on Russia, then Europe can be more forceful in the argument over who should rule over Ukraine, and Putin will have less power over Eastern Europe. The revoking of the ban will also affect Venezuela, as its economy is extremely reliant on their oil revenue. Since Europe and other countries are dependent on Venezuela for oil, Venezuela is able to charge over one hundred dollars per barrel. If the United States would be able to supply Venezuela’s consumers with oil, they would receive a 43% price decrease with a barrel costing around $58. If the price per barrel even dropped by five dollars, it would result in approximately $35,000,000 of lost profit. If Venezuelan crude oil is no longer dominant, the US’ exportation can lead to a mutiny of Maduro’s government. Effects of Lifting the Ban on OPECAs of 2015, crude oil prices have hit an all-time low: $48 per barrel. Estimates show that there is too much oil in the United Sates and domestic demand will fall in 2016, leaving a surplus of oil with no purpose. Meanwhile, OPEC is consistently producing oil on a grand scale, and is willing to lose a lot of money because they are hopeful that plummeting prices will make United States fracking an unprofitable venture. OPEC wants to remain dominant in the oil industry and keep United States as a consumer, oil dependent country. However, the United States has a strong countermove: lifting the forty year ban on gas exports. The only reason why the United States is even able to do this is because of fracking. Fracking has allowed for 9.08 million barrels of oil per day within America. This number places the United States as the largest producer of liquefied natural gas. In an effort to regain control, OPEC reduced oil prices. This would negatively affect America because fracking is very expensive, and if the fracking companies are not earning enough return on their money, fracking will no longer be cost effective. This plan already has succeeded and led to some cutbacks in major oil companies. However, in the Bakken formation in North Dakota, American companies are able to be profitable from barrels costing as little as $42, but most companies cannot survive with barrels under $60. OPEC is also negatively impacted from the deflation of oil prices. Venezuela and Nigeria need at least $120 to be profitable, while Iran needs around $136 per barrel. The real debate is who can survive these extreme cutbacks, OPEC or the United States’ natural gas industry. If the United States decides not to lift the ban, then it is clear OPEC will remain profitable and continue to monopolize the market. However, if the ban is lifted then America is able to export, which would ensure profits for companies selling barrels even as low as $38, and by 2030 can control the oil market. Conclusion Fracking has already made?a great impact on the United?States.? It has contributed?tremendously?to the US?economy and will continue to as Fracking technology develops. With regards to politics, Fracking will allow the United States?to increase its?foreign power and reduce OPEC’s influence?in the western countries. Furthermore, as?Fracking methods?progress, the negative?effects?that they have?on the environment will decrease.?Thus, Fracking's benefits outweigh its?detriments?and, though a current controversial issue, Fracking should be legal because of all of?the potential gains for?America.? ................
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