The Benefits of Fracking

Lobbyists have made sure we get the message about how bad fracking is for the planet and everything on it. Alarmist and sensationalized accounts of drilling-related woes abound, with little concern for accuracy or exaggeration. But what about the benefits of fracking? Is it possible that fracking is actually good for the environment and economy?

Little can be argued to change the minds of those who think that anything about carbon-based fuels and capitalism is inherently bad. But if you accept that petrochemicals do and will continue to play an essential role in our lives, you might like to have a few facts on hand at your next cocktail party. Let’s start with one of the biggest concerns—the environment.

Fracking Helped Reduce U.S. Greenhouse Gases Last Year

One of the major fuels extracted by hydraulic fracturing is natural gas. Natural gas burns cleaner than coal, producing less carbon dioxide and sulfur dioxide as a byproduct. Fracking has made huge deposits of natural gas affordable to mine, reducing its cost dramatically. As a result, more and more power plants are able to convert from coal to natural gas, lowering the release of greenhouse gas emissions considerably. Further reductions will come as more utilities convert from coal to natural gas, and commercial fleets are switching from gasoline and diesel fuel to natural gas, dramatically cutting tailpipe emissions. Unlocking shale gas has guaranteed the U.S. more than a 100-year supply of this cleaner-burning fuel.

Fracking Technology Reduces Oilfield Emissions

It takes energy to power the drills and pumps needed to extract oil and gas from the earth. Fracking and horizontal drilling processes allow multiple sources to be tapped from a single bore. Where wells used to be drilled every few hundred feet in clusters over an oil or gas field, today a single well can do the job. The math is simple—fewer wells use less energy resulting in lower emissions from both drilling and pumping equipment and secondary hydrocarbon releases. In fact, studies show that methane emissions are falling dramatically even as natural gas production is surging, and there have been no confirmed cases of groundwater contamination connected to fracturing operations in one million wells hydraulically fractured over the last 60 years

Fracking Has Put Billions of Disposable Income Back in Peoples’ Pockets

Lower fuel and energy costs have been a windfall for consumers, especially those with lower incomes. Economists at Barclay’s estimate that the drop in energy prices could generate $70 billion in additional consumer spending in 2015, and much of it will come from lower income families that spend over twice as much of their disposable income on fuel as do more affluent households. That’s right—fracking benefits the poor more than the rich. It also benefits many small businesses as their cost of heating, lighting and delivery drop due to fracking, not to mention additional sales from increased consumer spending.

Fracking Has Virtually Eliminated Our Dependence on Foreign Oil

Last year, the U.S. replaced Saudi Arabia as the world’s largest oil producer. U.S. production has put the country in the position to be a net exporter of oil, although certain laws and regulations restrict it, for now at least. Nonetheless, the boom in domestic production has eliminated our need to import oil to maintain our economic and security needs. Additional production by friendly nations such as Canada has helped destroy the grip of cartels like OPEC on oil prices, putting free markets in control and making us no longer dependent on those who may not have our best interests in mind.

In Conclusion…

Should we stop talking about fracking and dismiss any potential problems associated with it? Of course not. But fracking is highly regulated by federal, state and local governments, and energy companies have committed millions to environmental and safety concerns. It remains the cleanest and safest method of production, and promises to become even more so.

The Outlook for Investors

Energy companies face many challenges with lower prices, greater competition, and economic uncertainty in global markets. Innovation in both production and marketing will lead some to success while others struggle.

The oil and gas experts at BWAB track industry trends as we continue to identify hidden opportunities in oil and gas properties that offer excellent values for both institutions and individual investors. While others may be preoccupied with negatives, we’re busy finding companies positioned to thrive in today’s volatile markets.

We invite you to visit our website, BWAB.com, to learn more about our investment strategy, philosophy, and proven record in maximizing investor returns by building value through capital reinvestment, operational improvements and enhanced recovery and cost control.