Published initially at Illinois Review on Thursday, Sept. 27, 2012:
An Associated Press article by Kevin Bego, Decades of federal dollars helped fuel gas boom, describes how government subsidies and tax breaks preceded the breakthrough called "fracking" which allows natural gas to be extracted from deep shale deposits economically, so economically that natural gas prices have been reduced by over 60% in the last three years.
It is evident that Kevin Bego wrote his article while keeping in mind the President's highly charged statement, "You didn't build that," which is not quite true.
These gas deposits, 3000 feet deep or more in solid, non-porous rock, were thought to be unusable. Yet engineers and scientists in the industry persevered for more than twenty years, developing fracking technology to this end.
New natural gas discoveries in shale rock formations and rapid technological advances to recover the gas have benefited regional economics where production is taking place and have improved the U.S. domestic energy outlook.
Dr. Michell T. Baer, currently the director of Office of Oil and Gas Analysis within the Office of Policy and International Affairs at the Department of Energy, in 2009 related how domestic shale rock formations alone could meet our nation's natural gas usage for many years at current consumption levels.
The cost to the taxpayers to subsidize natural gas extraction, beginning in 1980, was about $100 million in direct subsidies, and $10 billion in tax breaks. As a result of this research, the wellhead price of natural gas has fallen from approximately $10/1000 cf in 2001 to the current price of of $3/1000 cf. The annual consumption of natural gas in the US was 24 trillion cf in 2004. Simple math shows that the net savings to US consumers is over $154 billion a year.
Not a bad return on investment. US taxpayers recover the entire cost of 30 years of investment each month. Most businesses in the boom years of the 90's would relish a two-year payback, and a 9 month payback would probably involve something shady.
Compare this to the negative payback of the President's "investment" in roads and bailing out states with unsustainable public employee's benefits, or the $80 billion lavished to save the UAW in Detroit (described by the President as "saving GM")
Not all that long ago the fracturing process threatened to derail the industry through lawsuits filed by radical environmental activist groups claiming that hydraulic fracturing resulted in groundwater contamination.
This claim lost traction when earlier in June of this year Environmental Protection Agency Administrator Lisa Jackson and President Barack Obama's science adviser, John P. Holden, testified separately before Congress that there has never been a single proven case of contaminated drinking water due to hydraulic fracturing. The process has been employed more than one million times since the 1940's.
Now radical environmental activist groups, in a continuing effort to derail the industry, have shifted their angst-ridden concern from contaminated drinking water to air quality, claiming that natural gas wells emit volatile organic compounds (VOSs) which could threaten public health for those who live nearby, especially those downwind of a hydraulic fracturing site.
Not unlike prior claims of water contamination, the air quality assertion is likewise exaggerated.
The following articles support what EPA Administrator LIsa Jackson finally admitted at the June Energy Commerce House Committee meeting.
1. No Adverse Health Effects from Natural Gas Drilling in Fort Worth in which the study concluded natural gas drilling sites release pollutants that are of low toxicity and do not reach levels that cause adverse health effects.
2. Highest Incidence Rates of Total Nonfatal Occupational Illness Cases, 2010 in which, according to a table from the U.S. Bureau of Labor Statistics, among the 25 top industries with the highest rates of occupational illness, oil and gas industry work -- upwards to 60 to 70 hours per week, year round -- on hydraulic fracturing sites, ranks below pet stores and outerwear manufacturing.
3. Data Show Public Health Impacts from Natural Gas Production Overstated where in a post for the Northern Wayne Property Owners Alliance, a toxicologist reported indicated that between 200 and 2009 when natural gas development increased more than 2,000 at Barnett Shale --one of the largest onshore natural gas fields in North America - nearby residents experienced improvement in key health indicators.
Where do we go in the future? Technology exists to power vehicles with liquefied natural gas, easy to transport, nearly as efficient, gallon for gallon, as gasoline, and can be refueled as quickly.
LNG burns with as much as 90% less pollutants emitted by gasoline, and with up to 40% less greenhouse gas (higher hydrogen/carbon ratio). With increased consumption, we can expect the price of natural gas to rise, but the benefits are manifold.
There is another source of natural gas which goes largely unrecognized - the oceans. The chief component of natural gas is methane, which forms a solid compound with ordinary water, called "clathrates" at great depths and cold temperatures of the sea. Methane is continuously emitted by organic compounds in the sea floor, and trapped in this ice-like form. The amount of methane trapped in this fashion is almost unimaginable. It is at least twice the amount of hydrocarbon fuel in all other forms.
If a way can be found to extract this trapped natural gas safely and effectively, we could stop mining coal and importing oil. It is theoretically safer to extract it than to leave it lay in the depths. Volcanic activity, earthquakes or undersea landslides could disturb methane ice, causing a massive release of methane into the atmosphere - a greenhouse gas 30 times more potent than carbon dioxide. This has, in fact, occurred many times in geological history, resulting in intense global warming.
What the future might hold for fracking, or any other energy source such as coal and oil, are dependent on three themes that run throughout Ten Principles of Energy Policy published in August 15, 2008 by Joseph Bast, CEO, Heartland Institute. Although written four years ago, the themes are as true today as they were back in 2008 and will continue to determine our energy policy for years to come. They will even ultimately determine whether the potential of fracking is realized.
Energy issues are often environmental issues, and vice versa. Restrictions on access to energy are often defended in the name of environmental protection.
Newspaper stories and advocacy spin are often at odds with sound science and facts.
Markets usually do a better job than governments at giving consumers what they want and directing capital and other scarce resources to their best and most efficient uses.