Earlier today, the American Petroleum Institute released an analysis detailing the economic consequences of a ban on fracking and federal leasing for energy development. The report was unveiled in response to Democratic candidates’ vows to completely ban fracking as a means of energy extraction.
The products derived from fracking are playing an increasingly important role in America’s energy mix. Natural gas has become the largest individual energy source for the U.S. industrial sector, with the power generation and industrial production from fracking consuming two thirds of U.S. natural gas production.
In response to the report, GAIN spokesman Craig Stevens said, “API’s report illustrates how a fracking ban will undermine national interests by reducing economic and industrial output, massively increasing the cost of household energy, crippling the agricultural sector, and weakening our national security.”
Hydraulic fracturing has become the predominant means of extracting oil and natural gas in the United States, with 95% of U.S. of petroleum products being produced using hydraulic fracturing. Energy companies have made significant financial and human capital investments in fracking. According to the report, the proposed bans would result in a cumulative $7.1 trillion loss to GDP by 2030, and account for over 7.5 million jobs lost nationwide by 2022. Annual household incomes would see a decline of 4.3%, or roughly $5,000 each year.
Household energy costs would also skyrocket, with the average household seeing their electric bills go up more than $600 a year. This includes increased costs for gasoline, residential natural gas for heating, electricity, and heating oil.
The agriculture industry would also face sizable impacts, with total cumulative losses exceeding $275 billion. Additionally, the cost of staple crops would rise dramatically. Fertilizer manufacturing costs are significantly dependent on energy prices, and a ban on fracking and federal leasing could increase the cost of natural gas delivered to fertilizer manufacturers by an average of more than 170%.
A fracking ban would have striking international implications, as post-ban America would be highly dependent on foreign supplies of natural gas. By shifting the United States from a net exporter of natural gas to being highly dependent on foreign imports, a ban would make our country less secure and offer our geostrategic and geopolitical adversaries leverage.
Democratic candidates are ignoring the markets and experts with their fracking ban proposal. Though a fracking ban might grow in fervor during election season, such a policy would be a tremendous setback to the U.S. economy that depends heavily on natural gas and for the dominant geopolitical role the U.S. plays in global energy markets.