NCPA - National Center for Policy Analysis

Hydraulic Fracturing Could Jumpstart Economy

April 10, 2013

During the last few years, hydraulic fracturing, commonly referred to as "fracking," has received attention more for its potential environmental impacts than its benefits. Public attention has incorrectly focused on the dangers instead of the economic benefits, say Kevin Hassett and Aparna Mathur of the American Enterprise Institute.

  • Fracking was first used in the 1940s but recently became more profitable as other technologies, like horizontal drilling, made many reserves of oil and natural gas economically viable.
  • The process involves the injection of a mixture of water, a proppant such as sand, and chemicals into an oil or gas well, which creases fractures in a pre-drilled well.
  • The chemicals used during extraction worry critics who fear for the environment, infrastructure, and health of workers and citizens near drill sites.

Following more than 15 years of steady production totaling about 70 quadrillion British thermal units (Btu) of energy, the use of fracking increased in 2006 and production rose to 74 quadrillion Btu in 2010 and 78 quadrillion Btu in 2011. The increase in fracking made the United States the world's second largest natural gas producer behind Russia.

  • New fracking and drilling techniques also resulted to a rise in crude oil production after more than two decades of declining production between 1980 and 2000.
  • In 2011, the United States produced more than 8 trillion cubic feet of natural gas from shale gas wells worth more than $36 billion.
  • Since 2003, oil and gas employment has increased by more than 198,000, a more than 67 percent increase. Sector employment is now at its highest level since 1987.

Increased oil and gas production also lowers the trade imbalance by reducing imports. By 2020, the United States is projected to become a net exporter of natural gas as huge reserves are finally tapped.

  • Fracking, and the resulting affordable natural gas, led to the transition of many coal-fired power plants into clean burning natural gas plants, which create half the carbon dioxide of coal-fired production.
  • The reduction in natural gas prices has also led to decreasing electricity prices and surging land prices, which serves to increase consumption.

Source: Kevin Hassett and Aparna Mathur, "Benefits of Hydraulic Fracking," American Enterprise Institute, April 4, 2013.


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