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Research & Commentary: Fracking Ban Is Unwarranted and Would Be Costly to Virginia Residents

January 28, 2020

Proposal Would Ban Fracking In Eastern Virginia Groundwater Management Area

A bill to prohibit hydraulic fracturing (also known as “fracking”) in the Eastern Virginia Groundwater Management Area (EVGMA) has been introduced in the Virginia Senate. According to the Virginia Department of Environmental Quality, EVGMA comprises “all areas [of the commonwealth] east of Interstate 95.”

Hydraulic fracturing, commonly referred to as “fracking,” is the process of extracting natural gas and oil situated several miles beneath the Earth’s surface. Over the past decade, fracking has increased the output of these two vital energy sources by 40 percent and 85 percent, respectively. Furthermore, the fracking industry supports nearly three million U.S. jobs. Thanks to fracking, energy prices have dropped dramatically. Consequently, consumers who use natural gas or oil for their homes, businesses, cars, and boats have saved billions. Even more, fracking has spurred massive economic growth.

Unfortunately, fracking has been maligned because of numerous false claims spouted by fracking opponents, including that the process pollutes the air and water. However, despite fear-mongering to the contrary, there is no evidence that seepage of fracking fluids, oil, or natural gas from fracking wells contaminate water sources. A plethora of scientific research, including more than two-dozen peer reviewed studies and analyses released since 2010 and a six-year Environmental Protection Agency (EPA) study released in 2016, have determined the fracking process is not a systemic threat to groundwater sources.

Studies from across the country also reveal that air pollution near fracking operations typically poses no danger to human health. Moreover, EPA reports the decades-long decline in the nation’s air pollution has continued unabated since fracking became more widespread over the past decade.

According to a 2018 report from the Consumer Energy Alliance, the fracking revolution has caused natural gas prices to plummet in Virginia. Consequently, residents and businesses in the Old Dominion saved $10.8 billion from 2006 to 2016.

In 2016, natural gas prices were one-third lower in Virginia than 10 years prior, leading to $4.5 billion in savings over that period for residential consumers. This is significant because roughly 870,000 Virginians live in poverty, and the average Virginia resident at or below the poverty line spends around a quarter of his or her take-home pay on energy costs. Additionally, commercial and industrial consumers saved $6.4 billion during the same period.

“Natural gas is essential for manufacturing processes,” the report states. “Nationwide, manufacturing accounts for about 80 percent of industrial natural gas demand with primary uses including drying, melting, machine drive, and space heating. According to the Virginia Manufacturers Association, Virginia is home to more than 5,000 manufacturing facilities that in total employ over 200,000 residents. These facilities contribute $34 billion to Virginia’s gross state product and account for over 80 percent of the commonwealth’s exports to the global economy.”

Moreover, the oil and natural gas industries supported more than 125,000 jobs in Virginia in 2015. These vital industries produced more than $6.9 billion in labor income and accounted for $11.97 billion in economic impact, according to a 2017 American Petroleum Institute study prepared by PricewaterhouseCoopers.

Fracking enables the cost-effective extraction of once-inaccessible oil and natural gas deposits. These energy sources are abundant, inexpensive, environmentally safe, and can ensure the United States remains a leading energy producer well beyond the twenty-first century.

In light of the immense number of studies showing fracking is relatively safe and that it provides substantial economic benefits to the Old Dominion, Virginia lawmakers should not seek to ban it in the EVGMA. This measure would be economically shortsighted and environmentally unnecessary. This is not to suggest there are zero risks associated with fracking or other drilling operations. However, those risks are quite small compared to the enormous benefits fracking continues to provide to the citizens of the commonwealth.

The following documents provide more information about hydraulic fracturing and fossil fuels.

Debunking Four Persistent Myths about Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/debunking-four-persistent-myths-about-hydraulic-fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.

Affordable Natural Gas Saves Virginia’s Energy Consumers Billions
https://consumerenergyalliance.org/cms/wp-content/uploads/2018/11/CEA-VA-Report-FINAL-111318.pdf
This report from the Consumer Energy Alliance examined how the shale revolution across the United States  has provided benefits to residents of the Old Dominion by boosting disposable income, revitalizing communities, and saving residential users $4.5 billion and commercial and industrial users $6.4 billion from 2006 to 2016.

What If ... Hydraulic Fracturing Was Banned? (2020 Edition)
https://www.globalenergyinstitute.org/sites/default/files/2019-12/hf_ban_report_final.pdf
This report produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found a ban would by 2025 lead to the elimination of 19 million jobs, a doubling of the price of gasoline, and a 324 percent increase in the price of natural gas. Further, the ban would reduce national GDP by $7.1 trillion and lead to the loss of a total of $1.9 trillion in tax revenue at the federal, state, and local levels.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels---summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels1 by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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