The Economics of Fracking

By Dejaun Gray and Lisa Fong

Hydraulic-fracturing (fracking) is a process that produces methane gas, which is highly combustible, by injecting a mixture of water and chemicals into the deepest depths of the aquifer in order to extract shale gas and oil. This process extracts a cleaner alternative to the fossil fuel oil that we have today. In fact, many companies such as Halliburton, argue that hydraulic fracturing supports local communities, families, and their neighbors by allowing them the opportunity to lease their land to natural gas companies.  By doing so, they can receive a large sum of money instantly to support their children, family, and even livestock. Additionally, fracking has far reaching benefits, including benefits to the oil and gas industry, the community, and the country. Fracking allows oil and gas companies to provide a better cheaper product to the surrounding communities and the country eliminating a need for dependence on foreign aid. Furthermore, fracking provides a more sustainable energy source without the risk of damaging our oceans with spills or leaks from the boats that transports foreign oil. As for the communities that surround the drilling sites where the gas is withdrawn, they receive the benefit of having new jobs and busier food franchises.

Many states, who have ridden on the shale gas boom, have increased their income by at least 12 percent by hosting approximately 20 or less hydro fractured gas wells.    For example, the company, USA Compression Partners, has transformed into a “one-stop shop for the compression equipment and services needed at shale gas fields,” and it is one of the five biggest fracking shares of stock available in America. This franchise branches out in the oil industry by adding hydraulic fracturing to its assets and leasing out its intensive equipment to other companies. In 2012 alone, USA Compression Partners had approximately $118 million in revenue and went public in January, 2013.

Another example is a global company specializing in business, energy, and economics. In a company report it says “cheaper oil and gas will transform the fortunes of many companies and has already boosted the income of the average American household by $1,200 a year.” It argues that fracking has not only helped the finances of the oil industry, but also of the average US household because the price of purchasing gas and oil has become cheaper. Furthermore, another case study produced by IHS informs readers that in 2012, the shale fracturing boom has helped oil and gas extraction jobs rise by 6 percent.

    Moreover, states that have allowed fracking have also reaped the profits that are connected to hydraulic fracturing. States like Pennsylvania have especially thrived from the economic boost:

Between 2007 and 2011, per capita income rose by 19% in Pennsylvania counties with more than 200 wells, by 14% in counties with between 20 and 200 wells, and by 12% in counties with fewer than 20 wells. In counties without any hydrofracking wells, income went up only by 8%. It is important to note, too, that counties with the lowest per-capita incomes experienced the most rapid growth. (Rott)

And because of statistics such as these, many other states and cities have tried to join the fracking train.

Aubrey McClendon controls a large portion of the U.S. shale drilling as the second largest natural gas producer in the U.S. He is influential in America’s natural gas industry in “the same way the Tea Party-financing Koch brothers control the nation’s pipelines and refineries.” (Goodell) His company, the Chesapeake Energy controls most of the land within the 575 mile radius of the Marcellus Formation (which is a large geological formation of shale rock) and so far, 91 oil and gas companies uses hydraulic fracturing upon the Marcellus Shale. And his company has already drilled more than 1.2 million wells nationwide. But even though his company is successful and he makes billions of dollars, McClendon still take out loans for more drill sites and for personal gain. Thus, this transaction rises confusion about his company being beneficial to the economy or used for personal interest throughout the media.

The Halliburton Company began hydraulic fracturing back in the 1940s after the introduction of the Halliburton loophole (a.k.a. Energy Policy Act of 2005). This loophole was introduced by the company’s former executive Dick Cheney in his capacity as Vice-President of the United States. As that being said, the fracking industry is the only one in America that is allowed by the EPA to purposefully inject “known hazardous materials” within close proximately to underground drinking water supplies.

None of the companies identify the risks of shale drilling and those who agree to respond to the farmers who have leased their land have repeated similar statements: we “do not use ethylene glycol in the fracking process.” However, these toxic chemicals have been seen within human and animal blood after being exposed to drinking tap water or other liquids in their homes. Moreover, the exposure of each home were within a close proximity from a nearby drilling well. And each home started experiencing toxic water, soon after, leases have been sent, signed, paid, and wells have been drilled nearby. So what’s happening in the background? Companies have convinced people into believing that these new methods will help solve the problem of dirty and imported oil across seas by not disclosing the potential risks of shale drillings on the land, air, and water around the communities.

fracking inncident map

(shown above: accidents resulting in deaths due to fracking)

Companies, such as Halliburton, try to accomplish the task of being less dependent on foreign oil by developing their own oil. In doing so, the company lessens equipment usage and downtime to control the cost of fracking. However, along with the increase of new well-paid jobs and reduction of overhead, companies who benefit greatly from shale drilling have not prioritized the complaints of the people. The fact, that it takes more resources to put into drilling than the benefits that is received from it, is being unaddressed. They highlight the people who are affected by fracking by focusing on the those who have gained profits from it.

And here is where the debacle of fracking becomes confusing because companies would debate that the concerns about the profits that they gain from the land are not mutually exclusive from their concerns about finding an alternative to foreign oil.

On another note, though hydraulic fracking has shown how advantageous it is to the United States for securing cleaner fuel and job opportunities, companies have continued to collect shale gas by using risky, if not cheaper, drilling methods and tools.

          Throughout the media, politicians including Dick Cheney have vouched for and promoted shale gas harvesting because it is believed to be one of the cleanest fuels to be produced in the future. And in certain aspects, he is correct: the shale fuel extracted from the earth is safer than its predecessor, fossil fuel. And with the economic benefits that accompany it, shale drilling has become a topic followed by politicians, company presidents, college professors, and more.

          So, it is clear the benefits of fracking are getting much more media coverage than the dangers. The consequences of fracking forces companies to hear the complaints of the landowners who have rented out their acres of land for the greater cause of obtaining gas fuel. Oil companies do not want to emphasize that the drilling procedure for acquiring the fuel is more toxic than the fuel that is extricated.  They do not want to speak about the mutating and dying animals that have begun to appear near the drilling sites. And they do not want to acknowledge that other humans are being forced to drink contaminated water caused by the fracking procedures that increase the profits of the oil industry.

          The reason that health issues have risen in states that allow their land to be fracked is because companies are more focused on securing economic benefits than sustaining the environment. The oil industry wish to keep the general populace content by omitting the effects that it has on the environment due to nature not being the main priority; money is.

Economically speaking, shale drilling is only the beginning of the country’s attempt in finding an alternative to produce natural gas. And we concede that it has helped the United States’ economy by providing opportunities of future employment for many citizens living near the drilling sites. Furthermore, the job opportunities produced, aids rural towns by giving the townsfolk funds to renovate their public or private properties.  So, in many ways, shale fracturing is beneficial in our country’s hopes to become less dependent on imported oil and foreign allies.

    However, our issue with fracking is not the fact that it increases revenue and boosts our economy. The issue is the fact that the risks of fracking are not easily discussed. Risks such as companies concealing environmental damage reports from the public, lease owners experiencing those damages, and the profits leaning towards corporations rather than the people. So, our question is this: is a cheap method to extract oil worth more than the hundreds of lives being poisoned and destroyed? Is money more valuable than a life?

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