Wednesday, October 22, 2014

The Hidden, Long-Term Cost of Fracking


Fracking is big business in America these days. Business commentators have gushed that the fracking boom has caused an economic boom in the United States. They claim fracking gives a competitive boost to our industries, thanks to lower fuel prices.

On the other side, activists have attacked the environmental harm caused by fracking. This was memorably demonstrated in the 2010 documentary, Gasland, that showed the environmental damage done by fracking to communities across the U.S.

Fracking is no doubt bad for the environment. And the shale gas being released is bad for the climate change crisis.

But there's another, mostly hidden, cost to the fracking industry that rarely gets much attention.

That is: while the fracking boom may produce short term economic prosperity, it will be a disaster for U.S. industry over the long term.

Why is this?

It's because fracking merely postpones the day when America must transition over to renewable energy. That will be a complex, costly process. But it is an inevitability. And the longer we postpone this, the more costly it will become.

Other industrialized nations, mostly in Europe, are now working furiously to make the difficult transition to renewables.

For example, Germany is working hard to implement its ambitious Energiewende policy of transitioning over to renewable energy. The costs will be massive---perhaps more than $1 trillion. And it will take decades to implement.

Germany is now making the sort of difficult choices that all nations will eventually be forced to make. The fact is, even with fracking technologies, shale gas is a finite resource. It's an industry that a number of skeptics like Bill Powers and Richard Heinberg have convincingly argued is overhyped.

Many business commentators in the U.S. have boasted that fracking gives U.S. industry lower energy costs and a competitive advantage over their overseas rivals. But this is the short of narrow-minded thinking that has caused great damage to U.S. industry over the decades. It's the same sort of short-term thinking that led Detroit to focus on building huge gas-guzzling cars in the 1950s and 1960s (when the Japanese and Germans were busy perfecting small, fuel-efficient vehicles that later conquered world markets).

Yes, in the short term, U.S. industry may enjoy an advantage.

But over the long term, it's clear that the German Energiewende approach will prove to be the correct approach to energy policy. Yes, it will be costly. But eventually, it will pay for itself.

In fact, once German industry masters this technology, it will no doubt be exported to other nations that wish to move away from fossil fuels. The future demand should be huge.

Other nations, like Japan, China and Spain are working hard to progress down the long road of transitioning over to renewable energy.

The very fact that high-tech renewable energy technology is cutting-edge, costly, and complex makes it appealing to export-oriented nations like Germany and Japan. These nations have always preferred to embrace industries that have high entry barriers and good export prospects.

But by embracing fracking's false promise, the U.S. is only delaying the inevitable. U.S. industry could be a major future player in high-tech renewable energy industries. But instead, it's likely that we'll cede control over these crucial industries to other nations like Germany and Japan. It's yet another step in the long, sad story of America becoming more and more like a Third World nation.

For all the billions of dollars we spend on fracking, at the end of the day, all we'll be left with are dry holes in the ground (and lots of areas where the groundwater is contaminated with fracking chemicals).

Fracking is not just bad for the environment. It will likely actually hurt America's economic prospects over the long term.


Bill Cheng said...

Solar panels keep dropping in price. Plus, they're getting more and more powerful each year. Renewable energy is becoming more and more practical.

Anonymous said...

These growing estimates of potential gas resources is good news indeed, as they constitute very big numbers, indicating decades of adequate reserves with additional development and open the United States up for policy options that were not available to it in the past.

It is my hope that these policy options will: (a) turn into prudent programs that allow the United States to reduce its outflow of capital for imported energy, (b) allow firms to compete more effectively because of competitive energy costs, and (c) enable firms to regain confidence in domestic regulatory energy policy and supply so they can repatriate the many manufacturing jobs that have fled our shores since the early 1970’s... from nat geographic. ..why would any company focus only on short term other than some investors, the vast majority of firms would base business models on 10-20 year viability of oil or nat gas reserves to be solvent. Further, whos saying that we arent pushing for alt energy anyway. Or is just that your opinion. In short, its a good thing for economic expansion while we do need to use the utmost care toward environmental stewardship. The epa has large teeth. I believe any company woud be deathly afraid to set foot inside the epa killzone for firms that dont follow very strict job killing regulations.

Marc McDonald said...

Hi Anon, thanks for your comment. It seems like a lot of the points you raise are issues I already talked about in my article.
And I must disagree with your statement that the EPA has "large teeth." In reality, the EPA is a joke.
Regulations on fracking are also a joke these days. Frackers are allowed to do whatever they want, with little oversight. As part of the fracking process, they're allowed to inject all kinds of chemicals into the ground---chemicals that, no doubts are contaminating our nation's ground water.
And what chemicals are these? Who knows? Industry is tight-lipped about what chemicals they use.
I think most Americans believe that all of this is subject to regulations. But in fact, little of it is regulated.
Back in the 1970s, "our" government seemed to actually care (at least a little bit) about serving the public interest. These days, the government only serves the interests of the Top .1 Percent that own this country.