Fracking’s Effect on Local Economies
Pro
Industry representatives like to highlight new jobs and the associated economic growth in nearby communities brought by new shale development. An example is the Bakken oil patch and the town of Williston, ND. With the advent of hydraulic fracturing, North Dakota suddenly had the fastest growing economy in the country, according to Forbes. The population in the town of Williston grew by 80%, and so did tax revenues. The explosive growth of the town led to an equally explosive demand for city services, and jobs. Infrastructure like utilities, schools, roads, and even a new airport were installed and staffed immediately, while other amenities like restaurants, banks, medical services, and shopping centers also popped up. This boom was closely tied to population growth from drillers, frackers, and crews of over 200 active oil rigs at the peak. Local communities were suddenly swimming in cash and in nearby Williams County, the average annual salary grew 79% from 2005 to 2010.
Con
The largest number and best paying jobs in tight oil come during the drilling and fracking stages, after which a new well is basically turned on and monitored for problems. So, most of the job creation is predicated on continued expansion, a model that simply isn’t sustainable in the long term. Shale oil and gas is also inherently a boom-and-bust industry since global oil prices fluctuate dramatically, meaning that unconventional oil is simply not competitive on the world market. Some large, well-diversified companies can afford to continue producing at a loss just to keep the wells in working order, but most companies are forced to shut down and many never recover.
A bust was triggered shortly before COVID-19 came on the scene, triggered by an oversupply of oil on the world market that originated, ironically, from the billions of barrels suddenly being produced from shale plays across the US. Development of new plays was shuttered and thousands of new residents and itinerant workers in the Bakken play were suddenly without jobs, forced to choose whether to wait it out or move on to greener pastures. Many oilfield workers chose to simply leave the industry altogether. With the sudden loss of tax income and population, local communities were left on the hook for massive debt taken on to provide all the expanded infrastructure and services. In 2016, Williston’s general obligation bonds were downgraded to junk status with over $200 million in outstanding debt.
Final Thoughts
In the end, while fracking has opened potential development in communities across much of the US, and contributed to rapid economic expansion in those areas, the truth is that oil and gas markets are inherently volatile, vulnerable to global geopolitics, and based on a finite resource.
Fracking’s Effect on the Environment
Pros
A huge selling point for pundits evaluating the relative virtues of fracking is the notion that since coal is widely known as the dirtiest of all fossil fuels, anything we can find to replace it, by definition, must be an improvement. In the US during 2020, coal burned for electricity contributed about 54% of total CO2 emissions from energy producers, while producing only about 20% of the total electricity generated. CO2 is the most abundant greenhouse gas attributed to human activity and the US is the world’s second largest producer, so coal is widely considered a significant contributor to worldwide environmental changes. In contrast, natural gas burns much more efficiently than coal, making it a better option in regard to both carbon cost and air pollution. In fact, the accelerating use of natural gas to produce electricity, made possible by fracking, is touted as the primary reason the US has been able to make impressive progress on reducing carbon emissions in some years. However, that progression is highly volatile, driven by the changing price of natural gas compared to dirtier solutions like coal.
Cons
The other side of the argument is that, while fracking activity itself produces no CO2 aside from that associated with the electricity and petroleum-fueled machinery used to extract it, it does produce copious amounts of methane. Methane is a much more potent greenhouse gas, with a heat trapping potential 80 times higher than CO2. Many groups point to this, saying that methane is worse than CO2 and is not actually a cleaner alternative to coal.
The problem here is that fracking activity in shale deposits is directly associated with methane release, since natural gas exists alongside oil in the shale formation. When gratuitous natural gas is released during fracking, the extraction company may not be prepared to capture, store, or transport it. Instead, they’ll choose to burn it off, generating CO2 emissions, or simply release it directly into the air as methane. That kind of activity may be regulated in some places, but enforcement is difficult and there are plenty of studies that demonstrate it’s not being effectively enforced.
Final Thoughts
As shocking as it is, saying methane heats 80x more than CO2 doesn’t take the full situation into account. Greenhouse gases are not permanent - molecules break down over time into constituent molecules. In fact, the warming effect of a greenhouse gas is usually calculated over a period of 100 years, which is what you see when looking at CO2. In contrast, methane is not a particularly long-lived molecule, and the extreme warming potential of 80x CO2 only applies during the first 20 years, rapidly falling off after that time. Looking at the 100-year effect of methane, then, puts it roughly equivalent to CO2, which again makes fracking a more attractive solution.
The other part, however, is that we’re currently in a global crisis fighting the rise of the earth’s temperature, including the loss of ice sheets at both poles and the resulting rise in sea levels. In that situation, even the short-term effect of methane emissions effectively puts global temperature goals out of reach. If we’re to have any hope of reaching climate targets, methane emissions must be brought as close to zero as possible.
