A Free-Market Energy Blog

Attacks on Fracking Attack U.S. Consumers

By Steve Everley -- March 26, 2014

“The Wind Energy Foundation says wind and gas make for a “mutually beneficial relationship” and experts have identified how fluctuating electrical demand requires baseload sources like natural gas to keep the lights on. Proposing a ban on fracking – and by extension the natural gas it unlocks – is, in effect, tantamount to proposing to banish renewables.”

“Does the fracking boom kill renewables?”

That headline has become common recently, with public discussions raging over whether hydraulic fracturing – or, more specifically, the affordable supplies of natural gas it has unlocked – is driving investment away from renewable technologies.

To be sure, many of the debates on this particular question – natural gas or renewables? – are sincere and conducted in the well-known, boring “big thinker” policy circles. A Venn diagram showing the people having that conversation and the general public likely shows two circles that don’t intersect.

However, there is another element to the discussion that is driven not by sober market analysis, but rather an interest in shutting down all U.S. oil and natural gas development.

As part of their laundry list of talking points, anti-fracking groups frequently allege that hydraulic fracturing, or “fracking,” is preventing the United States from realizing a utopia of emissions-free renewable energy, mostly in the form of solar and wind technologies.

Food & Water Watch – a deep-pocketed and aggressive anti-fracking group – has said affordable natural gas is “hurting renewables” by undercutting wind and solar. The Sierra Club – best known for formerly embracing natural gas, but only when the price was several times higher than it is today – is now pushing to “prevent new gas infrastructure” because “new natural gas power plants will out-compete emerging forms of renewable energy.” Natural gas “threatens renewables,” reads a breathless piece from EcoWatch, one of many favored online outlets for anti-fracking groups’ frustrations.

Let’s touch only briefly on the fact that these groups are not supported by evidence. Texas is by far the largest oil and natural gas producing state in the country, and more hydraulic fracturing occurs there than anywhere else. The Lone Star State is also the largest producer of wind power, shattering any suggestion that fracking poses some sort of barrier to renewables.

In fact, most experts and even renewable industry advocates say low-cost natural gas is needed for renewable technologies to grow, mostly to serve as a clean-burning source of “peaking” power to compensate for when the sun isn’t shining and the wind isn’t blowing. For example, the Wind Energy Foundation says wind and gas make for a “mutually beneficial relationship,” and experts have identified how fluctuating electrical demand requires baseload sources like natural gas to keep the lights on. Proposing a ban on fracking – and by extension the natural gas it unlocks – is, in effect, tantamount to proposing to banish renewables.

Beyond the factual inaccuracies, however, is a much deeper problem: The groups arguing against affordable natural gas are actually arguing against the interests of American consumers, especially low-income households.

It doesn’t take an economist to recognize that when the Sierra Club says gas will “out-compete” renewables, the reason is because natural gas is more affordable. What the Sierra Club, Food & Water Watch, and other groups want is for households to pay more for their energy, be it through new regulations or higher taxes on fuels they oppose (coal, oil, natural gas, and nuclear). Instead of supporting affordable energy, anti-fracking groups have anointed themselves the arbitrary pickers of winners and losers.

What’s even more shocking is that anti-fracking groups, who will often speak as if they are standing up for “the little guy” and the less fortunate, are actively campaigning against the interests of working families.

Last year, Mercator Energy conducted an analysis of natural gas prices over the past decade. The average price for natural gas was over $7 per million BTUs between 2003 and 2008. But with the wider adoption of fracking and horizontal drilling since then, which helped unlock massive supplies of natural gas, the price dropped to just $2.80 per million BTUs in 2012.

The result was a cost savings to American families of more than $32 billion in 2012. For low-income households specifically, the total savings was about $10 billion per year, which was three times greater than what the federal Low Income Home Energy Assistant Program (LIHEAP) provided that year.

But what do anti-fracking groups propose to replace these benefits?

Many activists have rallied behind a “100% renewables” plan for the country, which they’ve been trotting out in state-specific formats. They claim the only obstacle – the only one! – is a lack of “political will” to impose the plan upon consumers. The plan was even promoted in the hilariously flawed Gasland Part II as some sort of silver bullet “alternative” to hydraulic fracturing.

Andy Revkin for the New York Times described the plan as working “best as a thought experiment, given the monumental hurdles” that such a plan would have to overcome – including not only political obstacles, but also technical and economic ones.

Indeed, the price tag would be staggering. One such plan floated for the state of New York alone would cost $382 billion – over a third of a trillion dollars – according to an analysis by Bloomberg News. The lead analyst for Bloomberg said the plan is flat out “unrealistic.” But make no mistake: if adopted, the costs to households would be quite real – especially those with lower and fixed incomes, who spend disproportionately more on their energy than other income brackets.

It’s worth emphasizing that none of this is to suggest that renewable technologies are inherently flawed, nor does it indicate that they will never have a significant role to play in our energy portfolio. A diversified energy mix of low-cost options remains the smartest policy, so long as such a policy is agnostic toward the specific type of fuel to be used. We should all celebrate technological advancements that result in less pollution and lower costs, regardless of what type of energy can deliver that outcome.

And that’s exactly what the shale revolution has given us. Carbon dioxide emissions in the United States are at their lowest level in two decades, which the U.S. EPA has said is because of increased use of natural gas. Energy prices for millions of consumers – households and businesses – are dramatically lower.

That’s what makes anti-fracking advocacy so difficult to understand. Groups who want to ban fracking often claim that reducing greenhouse gas emissions is the greatest challenge of our time, and yet they oppose the fuel that is actually reducing those emissions. They claim to represent families without a voice, but they advocate for a future where those families will find it harder to make ends meet. And, by proposing to ban fracking, the activists are interfering directly with private property rights, as decisions on whether to lease one’s land are agreements made between landowners and the producer. Those agreements, by the way, have generated literally billions of dollars for farmers and other property owners across the country, many of whom have used the money to pay off debts.

If natural gas is “out competing” the fuel choices that anti-fracking groups prefer, then those groups should find ways to make their favored industries more competitive. The way to do that is not by destroying productive industries and raising energy costs for American families, which is exactly what would happen if we banned fracking.

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