U.S. CHAMBER OF COMMERCE

Energy Blog

Energy Blog

US Chamber of Commerce Blog

Eric Nelson Heath Knakmuhs (left) and Dan Byers, both with the Chamber’s Institute for 21st Century Energy, explain the energy facts at the Lincoln Memorial. Photo by Ian Wagreich / © U.S. Chamber of Commerce

The next stop in our “Monumental Issues” tour of Washington, D.C., is the Lincoln Memorial, where the public may visit 24 hours a day, seven days a week.

Another thing we rely on 24/7: our electricity supply.

In this episode, Dan Byers and Heath Knakmuhs, both with the Chamber’s Institute for 21st Century Energy, start off by discussing America’s diverse sources of energy.

But, as Heath notes, “Our nation is most reliant on two sources — coal and natural gas, which make up two-thirds of our electricity supply.”

Dan adds: “Unfortunately, a series of EPA regulations are targeted at removing these affordable baseload sources from the power grid. Without coal and natural gas, grid reliability will be threatened and electricity will become more expensive for families and businesses. This will drive manufacturing jobs overseas and make the American economy less competitive around the world.”

At the U.S. Chamber of Commerce, we continue working to promote policies that create jobs, foster growth and expand opportunity for every community and every American. And states and businesses are standing up to EPA overreach: 28 states are involved in litigation against the agency’s power plant regulations, and 166 chambers and business groups from 40 states are supporting the effort. Visit www.energyxxi.org to learn more.

See previous installments of “Monumental Issues.”

Monumental Issues: Talking Tax Reform with Caroline Harris Monumental Issues: Talking Health Policy with Katie Mahoney

 

 

 

 

Sean Hackbarth A hydraulic fracturing site located atop the Marcellus Shale in Pennsylvania.A hydraulic fracturing site located atop the Marcellus Shale in Pennsylvania. Photo credit: Ty Wright/Bloomberg.

For some people—especially presidential candidates—fracking is a dirty word that brings up fears of contaminated ground water. But for many people they simply don’t know much about it other than it’s riled up environmental activists, energy advocates, and politicians. They don’t realize the incredible effect fracking has had on American energy production.

If you are one of those people, want to know more about what fracking is, and wondering what the debate is about keep reading. If you don’t, watch this.

What is Fracking?

Fracking creates tine, micro cracks in rocks deep underground, so we can get the oil and natural gas trapped inside it.

Before fracking became widely used, companies drilled vertical holes into underground pools of oil and natural gas deposits. But geologists knew there was more energy down there, trapped in rock called shale.

Think of shale like a slice of birthday cake, only if you took a bite into it you would crack your teeth.

flickr_layer_cake.jpg Yellow layer cake with vanilla frosting.Yellow layer cake with vanilla frosting.Photo credit: veritatem. Licensed under a Creative Commons Attribution 2.0 Generic license.


Oil and natural gas are trapped in these rock layers.

That energy was out of reach until entrepreneur George Mitchell combined two technologies--horizontal drilling and hydraulic fracturing (fracking) and changed the course of American energy.

Now, instead of looking for pools of oil and gas, we have the ability to go get the energy that’s locked in the shale.

How Does Fracking Work?

A drill goes down vertically thousands of feet underground then turns ninety degrees and goes horizontally thousands of feet further to get into the shale layers that contain oil and natural gas.

The well is cased with steel and cement to prevent fracking fluid, oil, and natural gas from escaping. 

Tiny cracks are then created in the shale rock. Fracking fluid--mostly water and sand--is pumped into the well under high pressures to expand the cracks and keep them from closing. This releases oil or natural gas is which then pumped to the surface.

Here’s a video of what happens.

What is Hydraulic Fracturing?
Is Fracking Safe?

Yes, states and industry have developed regulations and practices to ensure that fracking is done safely. Take one state, Pennsylvania. It requires a desk-full of state and local permits before a drill can touch the ground.

The biggest fear used by critics is that fracking fouls ground water. You may have heard stories of people lighting their faucets on fire from methane—natural gas—that leaked into it supposedly because of fracking. But these are just stories that have been thoroughly debunked.

In fact, scientists at Yale University, the University of Cincinnati, and elsewhere have found no evidence that fracking contaminates drinking water. Even EPA, no cheerleader for fossil fuels, concluded in a 2015 draft report that fracking has not had “widespread, systemic impacts on drinking water.” Current and former top officials at federal and state environmental agencies agree.

How is Fracking Helping America?

In 2013, University of Texas-San Antonio Professor Thomas Tunstall proclaimed at a TED Talk, “Shale oil and gas development is in the process of literally transforming global markets and local economies at the same time.”

That’s an understatement. Fracking has skyrocketed American energy production, boosted local economies, made the U.S. an even better place for manufacturing, and changed the global energy landscape,

The biggest benefit is the dramatic increase in domestic oil and gas production. Oil production grew by 88% since 2009, and natural gas production increased by 36% in that same time span.

u-s-oil-production-2008-2015.png  2008-2015U.S. oil production: 2008-2015

u-s-natural-gas-production-natural-gas.png  2008-2015U.S. Natural Gas Production: 2008-2015


For local communities, the energy boom spurred tremendous economic growth. Hotels, apartment complexes, and “mancamps” were built to house the workers working the oil fields. Restaurants, bars, and stores also prospered from those workers.

And it has created jobs.

In North Dakota home of the oil-rich Bakken Shale, the February 2016 unemployment rate was 2.9%, well below the national rate. The state faced the dilemma of having too many jobs with not enough workers to fill them. The worker shortage got so great that, a home supply retailer resorted to flyling workers from Wisconsin into North Dakota every week.

Jobs are also being created by shale gas development. In Pennsylvania home to the Marcellus Shale, six counties where 751 natural gas wells were drilled and fracked all had less unemployment than the state average in 2014.

An Institute for 21st Century Energy study projects that by 2020 3 million jobs will be supported by shale energy development, rising to 3.5 million by 2035.

Consumers have been also won with fracking. Not only are gas prices this summer expected to be their lowest since 2004, but a 2015 Brooking Institution study found that “the shale gas revolution led to an increase in welfare for natural gas consumers and producers of $48 billion per year.”

Like consumers, industry has seen their energy costs fall, and since many materials are derived from oil and natural gas, they’ve also seen their supply costs go down. This has prompted domestic and international companies to build new factories in the U.S. According to the American Chemistry Council, 738,000 new jobs will be created and supported by 2023 because of plentiful natural gas.

From a global perspective, it’s a whole new energy ballgame. Since 2012, the U.S. has been the world’s top petroleum and natural gas producer.

us_russia_saudi_arabia_petroleum_natgas_production.png  2008-2014.U.S., Russian, and Saudi Arabia petroleum and natural gas production: 2008-2014.


The U.S. is now becoming an important energy exporter. The 40-year-old oil export ban ended in 2015 and American crude is being sold on world markets.

Natural gas is also being exported as liquefied natural gas (LNG) and shipped to customers worldwide. In fact, the prospects of natural gas are so good that the Energy Information Administration projects that the U.S. will be a net natural gas exporter by 2017 and remain that way through 2040

Why Are Some People Against Fracking?

Some of it has to do with the name, “fracking.” It’s an odd word that prior to the shale boom, was best known as something blurted by Battlestar Galactica characters.

Some of it has to do with not being familiar with the process and the safety processes employed when it’s being done. Hopefully this explainer helps.

And some of fracking’s opposition comes from people who reject fossil fuels of any type and have the mistaken belief that we can have a prosperous, modern economy without them. They're wrong.

From the energy it safely provides to the jobs it supports, fracking makes our lives better every day. It isn’t something to be afraid of, and no one should cringe when they hear it. Fracking is an American success story we should be proud of.

J.D. Harrison Louisiana businessesShrimp boats in Venice, Louisiana (Photo via finchlake2000 / Flickr Creative Commons)

One thousand miles separate Louisiana from Washington, D.C., but that certainly hasn’t stopped regulators in the nation’s capital from extending their reach deep into the Bayou State.

Federal regulations have a more significant impact in Louisiana than in any other state in the country, according to a new study measuring the relative impact of D.C.’s rules on businesses in every state. The analysis suggests that the effects of federal regulations on Louisiana businesses has expanded considerably over the past two decades, to the point where Washington’s impact on the Louisiana businesses is now 74 percent greater than the national average.

What’s driving the crippling impact on Bayou businesses? More than anything, it’s the Environmental Protection Agency’s onslaught of new regulations, according to the analysis, which was conducted by researchers at George Mason University’s Mercatus Center. The EPA’s rules have dealt a major blow to several industries that are vital to the state’s economy, including chemical products manufacturing and oil and gas extraction.  

Alaska and Wyoming landed second and third on the list, respectively, as their mining and oil and gas extraction sectors have been similarly bludgeoned by EPA’s recent regulatory tear. Indiana, Kentucky, Texas, Nebraska, West Virginia, North Dakota and Montana round out the top 10.

While those states have felt a disproportionately large share of the pain, the researchers note that the impact of federal regulations on private companies has been trending alarmingly higher in every state across the country, without exception. And while every agency has contributed to the surge, there are two culprits that stand out in the crowd. As the researchers explain:

For the years in which data are available, two factors have significantly driven the increase in overall regulation. The first has been the ongoing growth in environmental regulation, which represents the most significant contributor to the increase in regulation overall since 1997. Using the BEA industry classification system, 5 of the 10 industries that experienced the largest increase in regulation since 1997 are particularly targeted by environmental regulation: utilities; chemical products manufacturing; motor vehicles, bodies and trailers, and parts manufacturing; forestry, fishing, and related activities; and petroleum and coal products manufacturing.

The second major driver of regulations in recent years has been the reaction to the financial crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 set off a massive increase in the number of regulations in the CFR, outpacing all other laws passed during the Obama administration combined. This explosion of new restrictions significantly affected 3 of the top 10 industries experiencing regulation growth since 1997: professional, scientific, and technical services; securities, commodity contracts, and investments; and Federal Reserve banks, credit intermediation, and related services.

In fact, Dodd-Frank “is associated with more new restrictions than are all other laws passed during the Obama administration put together,” according to the analysis. However, it’s not just Dodd-Frank’s sheer number of rules and restrictions that are unprecedented – it’s scope is rather unique, too. By that, we mean the number of regulatory agencies that were required to add new rules due to the law as well as the number of industries impacted by those rules. As the analysis points out, it’s hardly just financial services firms that have been felt the effects of the law.

“A typical act of Congress instructs one, two, or perhaps even a handful of regulatory agencies to engage in some rulemaking activity,” the researchers wrote. “Conversely, Dodd-Frank has – so far – precipitated regulatory actions by at least 32 different agencies.” They go on to point out that the law has impacted far more sectors of the economy that other major financial reform laws.

“In the wake of Dodd-Frank, states that depend heavily on financial services may see fewer firms, diminished employment opportunities, less entrepreneurial activity, and a migration of business to countries with more favorable regulatory climates,” they conclude.

This new analysis reinforces a point that the business community has been making for years – that our country’s regulatory system, particularly when it comes to environmental and financial rulemaking, is utterly out of control. We have to rein in what has essentially become a fourth branch of government that is spewing new, onerous and poorly-vetted rules at American businesses and threatening the drive our weak economy back into a recession.

It’s yet another reminder of the urgent need for real regulatory reform in Washington.

“Without systemic reform, we will continue to see agencies like EPA roll out massive new regulations with little concern for costs, practicality, or even legality, and with real consequences for U.S. jobs, economic growth, and personal and economic freedoms,” Tom Donohue, President and CEO of the U.S. Chamber of Commerce, wrote recently. He noted that the U.S. Chamber is working to “to attack the root of the problem by advocating a reform package to restore accountability, transparency, and common sense to the rulemaking process.”

Without such a reform package, businesses in Louisiana, Wyoming, Alaska and every other state across the U.S. will continue to get knocked down by regulations. It’s just a matter of how hard.