Column: Let private-sector experts set fracking policy
On May 2, the Colorado Supreme Court ruled that bans and moratoriums on hydraulic fracturing by local governments are invalid and conflicting with Colorado statutes.
While this prevents a fractured approach to oil and gas regulation, fracking policies in most states are influenced by media-elevated fears with little regard to economic impacts. Better regulation would rely on policy development by private-sector professional and educational associations to balance proven risks of fracking with the tangible benefits of oil and gas development.
Attitudes of citizens in many communities are formed by fear and frustration. Much of this has been heightened by the media and environmental activist groups.
Voters in Longmont imposed a ban on fracking in 2012. The following year, a five-year moratorium on fracking was approved by voters in Fort Collins. The Colorado Oil and Gas Association sued both cities and prevailed. After appeals, the Colorado Supreme Court ruled that local governments cannot supersede the state’s primary authority to regulate energy.
The Colorado Oil and Gas Conservation Commission is a state agency that sets rules for energy development, including the use of fracking. In recent years, the COGCC has made increased efforts to include the concerns of communities during rulemaking. In Colorado, the goal has been to develop energy resources while protecting communities with tight regulations on fracking. New York, Maryland and North Carolina simply dismissed economic benefits and banned fracking altogether.
Fracking utilizes directional drilling and fluid consisting of about 98 percent water and sand and roughly 2 percent chemical additives. Opponents claim fracking strains water supplies, contaminates ground water and causes water-induced seismicity. These overstated concerns have been used by anti-fracking groups to incite fear in local communities and sway state governments to implement restrictive regulations.
This approach to regulation diminishes the fact that over 40 percent of oil and gas production in the U.S. relies on fracking. Because of new resources made accessible by fracking, North American natural gas will likely compose 70 percent of the world market by 2035. Approximately 3-4 million jobs in our nation are projected as a result of this growth.
Given the economic stimulus and job creation potential of our natural gas resources, it is critical to analyze the true risks of fracking and adopt a regulatory approach that mitigates risk while reaping the benefits of the resource. Government regulatory agencies are not cognizant of market mechanisms that affect industries and consumers. Moreover, government bureaucracies lack entrepreneurial vision, which fosters susceptibility to political special interests.
Comprehensive studies by major universities shows no evidence of ground water contamination by fracking or methane release when proper well construction techniques are used. Research also indicates that the likelihood of earthquakes is trivial due to fracking, well development and production, though high-volume wastewater injection wells have been linked to quakes. On their own, government regulators react very slowly to mounting evidence that fracking is safe.
On the other hand, market demands and competition constantly stimulate private-sector adaption and innovation. This gives industries critical insight and experience for self-regulation. In engineering and construction for example, independent professional and technical associations develop building codes, materials testing methods, and construction safety standards. Such associations are well-suited to answer questions about public and environmental risks, and to evaluate effective mitigation that involves reasonable costs.
As an example, reliance on the private sector for regulation could facilitate the development of tools like water markets, in which prices reflect supply and demand. This would incentivize reuse and spur innovation in fracking methodology. New technology, such as adding radioisotopes to fracking fluids could be used to “fingerprint” potential contamination sources if leakage occurs in the future.
Private-sector professional and educational associations can develop best practice standards for implementation by state governments across the nation. It’s in the best interest of companies to produce energy safely and efficiently. With free-market pressures in effect, consumer demand will rise for “certified natural gas,” produced using practices that balance economics with proven public concerns.
The economy in the United States is successful because of free markets and entrepreneurial innovation. When any level of government engages in policies of excessive regulation, consumers pay a high price while not necessarily receiving the benefits of increased health and safety. Competition and consumer demand are critical arbitrators for energy policy. Reliance on private-sector associations for regulatory policy would assure local communities that fracking bans and moratoriums are not required to ensure abundant, affordable, and responsible energy production.
James D. Kellogg is an engineering consultant and the author of “Radical Action: A Colt Kelley Thriller.” Look for the novel on amazon.com and visit JamesDKellogg.com or email firstname.lastname@example.org.
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Economics may seem complex, but it’s actually common sense, which explains why politicians have difficulty considering the economic effects of their legislation.