| Greetings, Utah Energy United! Of the things that make the United States unique – and there are many – perhaps the most important one with regard to our industry is property rights. In virtually no other country on earth are private citizens allowed to own a parcel of land whose reach extends not only upward to the sky, but all the way downward to the earth’s core as well. It is the ownership of mineral rights (along with favorable geology, of course) that allowed the fracking revolution to happen in the United States in a way that it didn’t in other countries. Not even close. Companies could negotiate deals with individual landowners to explore for oil and gas in a way that benefitted the company, the landowner, and society simultaneously and it happened several thousand times all over the country. It still happens today, and because of this, the United States has become the largest oil and gas producer in the entire world. A recent #longread in Politico is titled “The Rise and Fall of the Fracking Phenomenon” by Mike Soraghan. The framing, not to mention the title which we’re largely ignoring because headlines are designed by their nature to be provocative and invite clicks, is interesting because the implication is that somehow the practice of fracking is (or is going to be) ultimately obsolete. That’s like writing about cooking and implying that dicing vegetables is ultimately going to become obsolete or something, but let’s not be pedantic and focus on the cultural discussion around fracking, which has persevered. If you’ve worked in this industry at all over the last 15 or so years, you’ve likely had to explain fracking to someone. Fracking became an easy avatar for anti-oil and gas sentiment because it’s a scary-sounding word, it’s easy to take out of context, and it’s fairly complicated to explain to a layperson. Bad faith actors like Josh Fox could maximize those traits in his agitprop “documentary” Gasland that probably directly contributed to fracking bans in New York and other (non-oil and gas producing) states in the 2010s. This is all covered extensively in the Politico piece, which, even though we might disagree with some of it because we have skin in the game, is worth your time. What’s most interesting to us is near the end of the piece when MIT Professor Christopher Knittel is asked whether fracking, and all of the domestic oil and gas it unlocked, was ultimately “worth it.” The answer, he found, is yes: “on average.” The data “suggest that the net effect is positive, meaning that, on average, the benefits exceed the costs,” according to the study he conducted with three other scholars and published in 2019. They even found an average benefit, about $2,500 annually per household. Digging into the numbers a little more, and there’s this: Take it from the Federal Reserve. In a recent report, the central bank wrote that an oil shock like the one we’ve seen this year, if it had occurred in the 1970s, would have caused significant joblessness. The Fed says it would have sliced the employment rate in the United States by nearly 2 percent. “Today’s effect,” the report says, “is essentially nil.” And it boosted the American economy in a big way. In a separate report, the Fed said the oil and gas sector played an outsized role in growing the economy from 2010 to 2015, increasing U.S. gross domestic product by more than 1 percent. That, the report said, is “a substantial impact.” The article concludes by wondering if due to the activity surrounding the Strait of Hormuz and the oil crunch that has affected the entire world will accelerate some countries’ transition to other energy sources and citing Uruguay’s electricity generation coming from 99% renewable sources as an example. Maybe? But this is something the world has heard for something like 50 years. The oil and gas industry has an uncanny ability to reinvent itself again and again. The “fracking phenomenon” may not be the cultural touchstone it once was, but its practical usefulness remains unquestionable. Until proven otherwise, we will continue to bet on oil and gas.To read the entire Politico article, please click here. Thank you for your continued engagement with Utah Energy United. Happy Friday! Be sure to follow us on X, Facebook, and LinkedIn. And if you know someone who should be a part of Utah Energy United, get them to sign up here. Rikki Hrenko-Browning President Utah Petroleum Association 6905 S. 1300 E. #288 Cottonwood Heights, UT 84047 (435) 219-0963 rhrenko-browning@utahpetroleum.org  |
The Rise and Fall of the Fracking Phenomenon