The Environmental Protection Agency has issued a report with the brisk title, “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources.” It runs to about 1000 pages of what I am sure is tedious bureaucratic prose, so the executive summary is a better bet.
In a nutshell, the EPA report on fracking says that the dangers of fracking with regard to drinking water supplies are minor. While they found a few instances of it, due to improper drilling techniques and such, there was nothing systemic:
We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.
The New York Times reports,
The report identified 151 cases from 2006 to 2012 in which fracking fluids or chemicals spilled on or near a drilling well. The spills ranged from 5 gallons to more than 19,000 gallons, with equipment failure the most common cause. Fluids reached surface water in 13 cases and soil in 97 cases, the report said. None of the spills were reported to have reached groundwater.
The environmental movement, naturally, went ballistic. Earthworks, an environmental group, insisted that the report says the exact opposite of what the report says.
Today EPA confirmed what communities living with fracking have known for years, fracking pollutes drinking water. Now the Obama administration, Congress, and state governments must act on that information to protect our drinking water, and stop perpetuating the oil and gas industry’s myth that fracking is safe.
The shale oil boom in the United States — U.S. oil production is up 3.6 million barrels a day in just the last four years — is the biggest economic development of the still-young 21st century. And it is by no means over, as Donald L. Luskin and Michael Warren reported in the Wall Street Journal on Monday. The oil industry has climbed a steep learning curve and can now make more profit, with oil at $65 a barrel, than they could three years ago when it was at $95.
Capacity across a diversified portfolio of wells can be turned on when future prices justify it, and off when they don’t. That turns upside-down the traditional model of oil megaprojects that require billions in upfront capital, years of lead time, and always-on production irrespective of price.
All this means that, for the first time in history, oil production is becoming a modern manufacturing process. The frackers are engaged in “just-in-time” production, analogous to the methods pioneered by Japanese manufacturers in the 1970s and 1980s, which led directly to hyper-efficient global supply-chain management perfected by Wal-Mart in the 1990s.
And this makes the United States, not Saudi Arabia, the swing producer, with vast geopolitical consequences, all of them good for the United States and for the world economy. Luskin and Warren predict that,
There will be no limits to growth in the global economy in a few years when, thanks to American ingenuity and entrepreneurship unleashed upon shale formations world-wide oil—like transistors—becomes, for all practical purposes, free. And the lower oil prices go, the more money the frackers can make.
No wonder the environmentalists—fiercely opposed to capitalist success in any form—are horrified. The EPA report is probably the last nail in the coffin of their hopes to stop fracking. The wonder here is that the EPA, stuffed with environmentalists in one of the great regulatory captures in U.S. history, produced an honest report.
