Monday, January 14, 2013

Fracking Matt Damon & Why I Don't Mind Hydraulic Fracturing

A movie starring Matt Damon, which is entitled Promised Land, recently opened in movie theaters. The plot goes something like this: a corporate salesman, played by Damon, comes in with his sales partner to pay the citizens of a dying rural town in Pennsylvania to give them permission to drill on their land through a process colloquially known as "fracking." Without getting too much into the plot of the movie, it has been criticized for its virulent anti-fracking stance, not to mention that its funding is from an oil-rich, OPEC nation (no agenda there, right?). Aside from faring poorly at the box office or receiving lousy reviews, does the movie have a point? Any movie that has a blatant agenda, regardless of political leanings, should always be taken with a grain a salt. Regardless of how this movie fares, it begs the question: Is the practice of tracking terrible enough that the costs outweigh the benefits, or can we look at fracking in a more positive light?

First, it would be befitting to become familiar with the basics of fracking. Fracking, also known as hydraulic fracturing, is the process of injecting a pressurized fluid (a combination of water, sand, and chemicals; mixtures used on a well-to-well basis can be found here) underground in order to break apart the rock and release natural gas, petroleum, or other substances. The process has been lauded because not only can it extract hydrocarbons at a more efficient rate, but it taps into an energy source previously thought unimaginable. Although a good majority of this mixture consists of sand and water, the issue is that the anti-fracking critics are claiming that the remainder of the mixture has chemicals toxic enough that it is contaminating groundwater, as well as ruining the general environment.

Before going into the veracity of the claims of environmental concerns, a few things about energy policy in general. First is that we are dealing with an increased global demand of energy consumption. As nice as it would be to have renewable energy sources right now, the truth is that these sources are either too expensive and/or they cannot meet current demand for energy consumption for baseload capacity, let alone peak power capacity. I'm not saying that we shouldn't invest in R&D for renewable energy....quite the contrary! As a short-to-medium-term energy policy, we cannot rely on renewable energy as a large contributor to overall energy production. We also need to realize that fossil fuels will not last forever. There will be a point in which the conventional sources of procuring petroleum, coal, or natural gas will no longer be a solution, which brings a procedure such as hydraulic fracturing to the discussion table.

Let's return to these claims about environmental harm. We clearly would like to stay away from what a lot of environmentalists do in general, which is use the Nirvana fallacy to dismiss any alternative to petroleum and coal, whether that would be nuclear power, wind power, or in this case, hydraulic fracturing. I'm not going to be Pollyannaish about fracking because much like anything else in life, it comes with risks, which is why it would be impractical to apply something like the Precautionary Principle here, i.e., that principle that proves everything is guilty before proven innocent.

The jury is still out on the EPA study for water contamination [in Pavillion, WY], although the EPA did a study earlier this year in Dimock, PA, which could very well be the inspiration for the Promised Land, and the conclusion was that there were no issues with their water supply. In spite of New York's ban on fracking, the state's health department nevertheless found that if they decided to frack in the Marcellus Shale, it would be a reasonably safe procedure (study here). EPA Administrator Lisa Jackson even admitted that there are no proven cases that fracking causes water contamination. Rather than throw out the baby with the bathwater [via banning fracking], maybe what we should advocate for is something like focusing on technological improvements so that risks are minimized. I'm clearly not a fan of heavy-duty regulations. However, given disasters such as the BP oil spill and how unpopular an unregulated energy sector is, a small amount of regulatory enforcement would be the alternative of allowing this unpopularity halt production altogether.  

Rather than get bogged down in the downsides of fracking, let's also touch upon some of the benefits. For those interested in addressing climate change, natural gas produces half of the carbon dioxide and a third of nitrogen oxides, and a hundredth of sulfur oxides that coal production does, which means the GHG (greenhouse gas) footprint is a third of that of coal production. Although it would not be a long-term solution for climate change [since the long-term entails little to no carbon emission], it would certainly be a policy to create a bridge between the short-run and the long-run, as well as providing researchers more time to come up with cheaper ways of producing renewable energy.

There are also economic factors. Fracking created thousands of jobs and will continue doing so. This fracking boom has also caused an overall decrease in natural gas prices. If this price decrease means an extra $118B per annum to the GDP, the average household would have an extra $2,000 per annum.

It's rare to come across an environmental policy that both decreases carbon emissions and improves the economy, but fracking does the trick. Any potential environmental concerns can be largely mitigated with oversight, transparency, and technological developments. Aside from that, it will be a great way to deal with our short-to-medium-term energy issues, give a boost to the economy, and keep energy prices low.

12-21-2014 Addendum: The Congressional Budget Office recently published a study regarding the environmental costs and the economic benefits of fracking.

3-21-2016 Addendum: The Heritage Foundation points out studies in its latest article showing the science in favor of fracking, including the EPA's 2015 study, which is currently the most comprehensive one out there, saying there are no "widespread, system impacts on drinking water."

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