CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press David Brooks Comes Out for the Middle Position on Fracking: Drill, Baby, Drill

David Brooks Comes Out for the Middle Position on Fracking: Drill, Baby, Drill

Print
Friday, 04 November 2011 04:16

As a deep thinker, David Brooks always takes the middle positions between the extremes of the left and the right. We know it is the middle position because David Brooks holds it. Today, David Brooks discusses shale gas and essentially says "drill, baby, drill."

There have been many issues raises about the safety of drilling for shale gas since the companies that are engaged in this process, known as "fracking" don't have to disclose the chemicals they use. While companies in other industries would have to publicly report chemicals used in mining under the Safe Water Drinking Act, the gas companies doing fracking arranged to get a special exemption from Congress because, well, because they could. While a recent study by scientists at Duke found evidence of methane contamination of drinking water in areas near fracking sites, David Brooks assures us that there are no problems.

Brooks also is a bit off on the economics of the industry. He tells us:

"Already shale gas has produced more than half a million new jobs, not only in traditional areas like Texas but also in economically wounded places like western Pennsylvania and, soon, Ohio. If current trends continue, there are hundreds of thousands of new jobs to come."

Let's look at this one a bit. According to the Energy Information Agency (EIA) [Table A14], current production of shale oil is around 5 trillion cubic feet a year. At $4 per thousand cubic feet, this gets us $20 billion a year. For the economy as a whole we spend an average of more than $100,000 per job ($15 trillion GDP, 130 million jobs). If we use this number for the shale oil industry, then we get 200,000 direct jobs in the industry. It would take a multiplier of 2.5 to get us Brooks' number of more than 500,000. (Economists usually assume a multiplier close to 1.5.) 

In the longer term, economic models assume that the economy is at full employment, so the contribution of shale oil to employment would only be to the extent to which it reduces U.S. energy costs below what they would be otherwise. This is likely to be very limited. In the EIA analysis, even in the long-run shale oil is projected to supply around 70 percent of gas production, which is only one source of energy.

If it turns out that fracking results in polluted drinking water, the resulting increase in health care costs could quite possibly exceed any benefits from lower energy prices. Anyone committed to a free market (as opposed to government subsidies to the gas industry) would insist that the gas companies internalize the cost of whatever damage is caused by fracking. Then fracking would only take place if it were justified by market prices. 

Comments (8)Add Comment
Smoking Makes Comeback: Smoke Frack Legally
written by izzatzo, November 04, 2011 6:47
While companies in other industries would have to publicly report chemicals used in mining under the Safe Water Drinking Act, the gas companies doing fracking arranged to get a special exemption from Congress because, well, because they could.


Exactly. Brooks understands that individuals - not government - should decide whether they want to consume something or not.

Remove the exemption so crack fracking is penalized no more than powdered fracking or cigarette fracking and therefore avoids discrimination since negative externalities are spread across all races equally.

Stupid liberals.
If it isn't regulated...
written by LSTB, November 04, 2011 8:41
...Then we're back to common law nuisance and trespass claims, which will involve protracted litigation, constitutionally and statutorily capped punitive damages, and a lot of people wondering why fracking isn't regulated.
Fracking
written by Ron Alley, November 04, 2011 8:53
The hydraulic or acid fracturing process is not well understood by almost all of those who write on the subject. The process has been used in various forms since the 1950's. It was developed for use in semi-arid climates with little ground water except in large, deep aquifers. The oil and gas companies that developed the process also developed standards for rating the porosity of the shale formations and techniques, materials and devices needed to seal the bore of the gas wells. By and large, they did a fantastic job.

However, the underground structures, from the surface to the producing formation, found in the places where the process was developed differ from those in other places such as Western Pennsylvania. The question is not whether the oil and gas companies should produce gas in places such as Western Pennsylvania, but how their drilling practices should be regulated and the extent to which they should be held accountable.
...
written by Kat, November 04, 2011 9:30
I was curious as to what Mr. Brooks would write about today. Would it be that the poor are lacking in moral fiber so tax increases on the wealthy are useless or would it be tax increases on the wealthy are useless because the poor are lacking in moral fiber? Why none of the above! To my surprise he turned to fracking and of course settled on the sensible centrist position. The sensible centrist opinion of course is fracking is great with some "sensible regulation" and sensible regulation is regulation that doesn't go overboard and require disclosure of chemicals used in the process. Nor does it require any discussion of who pays for the environmental costs because gosh, it such a gift to humanity and will provide a bridge fuel until that perpetual motion machine is invented.
...
written by skeptonomist, November 04, 2011 9:49
If the environmental issues can be overcome, the payoff for a new energy source, whatever it is, could be huge. This is because the actual and potential costs of reliance on oil are huge. Our involvement in the middle-east, with its multi-trillion dollar military costs and immense loss of human life, is mostly for the purpose of securing oil supply. If that supply is interrupted, there would be very severe economic consequences starting with a considerable increase in inflation. Replacing oil with coal, which would likely occur if the price of oil stays consistently high, has immense environmental costs.

The history of oil production forecasting was that of continual understimation of reserves. This period may be over now - that is we may actually be nearing or at peak oil - but forecasts of shale gas reserves may be as uncertain as those of oil reserves were a hundred years ago. It would be very foolish to make very long-term plans on the basis of current knowledge of gas reserves.

The current irresponsible exploitation of shale gas should be brought under control, but there is too much knee-jerk opposition to developing these reserves.
The Joy of War
written by Union Member, November 04, 2011 10:23
Of course we could just end all Wars of Aggression for resources and peacefully negotiate contracts with producing states which respect Human Rights, and the Environment, and which deliver energy to the market at a Fair Price.
skeptonomist
written by Union Member, November 04, 2011 2:54
Your point would be worth consideration were it not for the fact that ALL the levers of power in Washington are occupied by industry insiders.
Carpet cleaning chemicals
written by Carpet cleaning chemicals, November 13, 2011 10:59
Hey David,you have just surprised me by this submission.Your views about the chemicals are very different.After read a couple of the articles on your website these few days, and I truly like your style of blogging
Carpet cleaning chemicals

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives