Fracking's promise of jobs, growth too compelling to ignore
By Jon Sanders
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Energy crises are as old as civilization itself. In his book The
Ultimate Resource 2, economist Julian Simon has catalogued many examples
going back thousands of years. Our predecessors feared they would run out of firewood,
coal, oil, whale oil, etc., and be left cold and miserable. They didn't. Why?
Simon's insight is that the world's "ultimate resource" is humanity
itself, our talent, energy, and entrepreneurial spirit. With a greater
understanding of economics, specifically the motivations provided by that
signal of relative scarcity, the price mechanism, Simon saw that the same
processes that had people exhausting one resource also inspired enterprisers
and inventors seeking its successor.
the crisis du jour, but how did we get
on oil in the first place?
Then in the mid-1800's the English
came to worry about an impending coal crisis. The great English economist,
Jevons, calculated that a shortage of coal would bring England's industry to a
standstill by 1900; he carefully assessed that oil could never make a decisive
difference. ... Another element in the story: Because of increased demand due
to population growth and increased income, the price of whale oil for lamps
jumped in the 1840's, and the U.S. Civil War pushed it even higher, leading to
a whale oil "crisis." This
provided incentive for enterprising people to discover and produce substitutes.
First came oil from rapeseed, olives, linseed, and camphene oil from pine
trees. Then inventors learned how to get coal oil from coal. Other ingenious
persons produced kerosene from the rock oil that seeped to the surface, a
product so desirable that its price then rose from $.75 a gallon to $2.00. This
high price stimulated enterprisers to focus on the supply of oil.
Today's chorus of worry grows insistent. We need to wean
Americans off oil before it is too late. It's bad for the environment but good
for the people who hate us. And we need it to cost less.
Meanwhile, the Ultimate Resource has been -- without the help of government,
which is key -- investing tons of money, time, and effort. Their efforts
resulted in the very recent discovery of commercially viable methods of
hydraulic fracturing ("fracking"), which releases oil and natural gas
trapped in solid and hitherto impregnable rock deep, deep underground.
Kevin D. Williamson touched on that huge investment (and risk!) in his Feb. 20 National
George Mitchell, the legendary
gasman who staked his fortune on the seemingly crackpot idea that you could
efficiently get gas out of a rock, [had] tried everything else. Range engineer
Mark Whitley was with Mitchell in the early days, and still gets a little edge
in his voice when he talks about the dicey prospect of having invested about $1
billion of a company worth only about that much in a technology that nobody
thought would work. Noting that President Obama claimed that "it was
public research dollars" that made shale extraction possible, he laughs
without mirth, and looks like he wants to spit: "Not true," he says. "We
tried everything known to man to get a rock to produce. There's a lot of people
who claim to be the father of the Marcellus, but if you didn't put any money in
or take any gas out, then what's that? It was industry studies, industry
experience, and industry dollars that did this, and we've driven up production
more rapidly than anybody thought possible." And it was far from a done
deal for years: "We could have thrown in the towel any time during the
first ten years, but the one guy who didn't want to quit was the guy in charge:
They tried all sorts of brews to get the shale to give up the gas, and, as the
expenses mounted, they tried cheaper and cheaper alternatives, eventually
settling on the low-tech combination of water and sand that turned out to be
the thing that actually works. "Economics drove it," Whitley says.
Since then, Bloomberg has reported on "Americans
Gaining Energy Independence With U.S. as Top Producer." The president
boasts of "a
supply of natural gas that can last America nearly 100 years."
Environmentalists who otherwise voice support for clean-burning energy have
opposed fracking on the stated basis that it might
contaminate groundwater, but Environmental Protection Agency administrator
Lisa Jackson completely
dismissed that concern in testimony before Congress last year. A recent
Vancouver study also finds no
proof of groundwater contamination.
Meanwhile, unlike other states, North Carolina maintains
a ban on fracking. Gov. Bev Perdue vetoed
a bill that would have led to a review and likely changes in state law with
respect to hydraulic fracturing. The state Senate voted last July to override
her veto, but state House has not yet been able to muster up the bipartisan
votes needed to override. In the meantime, the state Dept. of Environment and
Natural Resources is charged to study oil and gas exploration in the state by
directional and horizontal drilling and hydraulic fracturing and must issue a
report to the Environmental Review Commission by
While North Carolina struggles with an ongoing abysmal
employment situation, fracking is providing a welcome boon for North
and Ohio, among others. Being a latecomer in the game could have its own
benefits, however; as Daniel Fine of the New Mexico Center for Energy Policy
has explained, North Carolina is well positioned to survey and adopt
the best practices, the best technology, and the best legal landscape. And
the Deep River Basin in Lee and Chatham counties offers an especially
promising area for development.
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