To many people, fracking (hydraulic fracturing) denotes a dangerous way to produce oil and natural gas. To others, it’s the name of an industry that appears to be the saving grace for the United States economy.
A Controversial Subject
Surrounding the fracking industry is much controversy regarding its effect on the environment and human health. Although advancements in fracking technology have resulted in a significant increase in the United States natural gas and oil production, many anti-fracking activists are seeking to shut the industry down. Their protests are leading to an increasing amount of bans in the industry as the debate continues to grow on the potential negative aspects of fracking. As more attention is drawn to its potential negative side and impact to the environment, less attention is being paid to its benefits.
To economists, US energy companies, and other proponents, fracking is a revolutionary development in the energy sector. Many local energy exploration and production companies have expanded their operations and increased local economic growth to that of gold rush proportions.
Very Beneficial for Local Economies
Although fracking appears to be very beneficial for local and global economies, current US policy makes it possible for many states to oppose it. Most notably, the state of New York recently banned the practice and has paved the way for other states to follow suit.
Local communities that allow fracking have experienced increased economic growth and increased revenue. Although this is a great benefit, many tend to place more significance on the global benefits. Now that the US is the largest producer of oil thanks to its shale wells, it no longer has to spend billions of dollars on energy imports to stimulate other global economies. Instead, the US can spend those billions of dollars at home and stimulate its economy. This has led to a drastic drop in oil prices. Although low oil prices are not bad, when they stay low too long, other sectors start to suffer.
Increased US Production
Hydraulic fracturing has given the United States the means to decrease its dependence on foreign oil. It costs the US billions of dollars to import oil from foreign soil. And if there are any political undercurrents going on between the US and the foreign importer, those prices increase significantly. The economy is still trying to recover from its last depression and when the US has to import its oil from other countries, taxpayers, and small businesses are the ones that suffer most. Since their wallets are being drained by high oil prices, they tend to stop spending money in other sectors and the economy suffers and struggles to rebound.
As natural gas production continues to increase in the United States, so does its consumption. Projections suggest that the US needs to start moving away from its dependency on coal and to invest into the further development of natural gas and oil as more sustainable and clean renewable sources of energy.
Many companies in other sectors, such as the auto industry are starting to reap the indirect rewards of fracking. They have watched the energy trends in the market and have started to maximize their operations by using natural gas more efficiently and reducing its need for other forms of energy.