The University of Chicago is out with a new study titled “The Local Economic and Welfare Consequences of Hydraulic Fracturing,” which compares the costs and benefits of fracking in nine shale regions in the US. According to the school’s press release, the new study has some great news for the oil and gas industry. And yet, the oil and gas industry has so far responded with cricket chirps.
Now, why is that?
How To Bury The News
Part of the problem could have to do with timing. The results of the study were publicly announced in a press release issued on December 22 by the Energy Policy Institute at the University of Chicago (EPIC) with this headline…
Study suggests hydraulic fracturing boosts local economies
…and this subheading:
On average, benefits such as employment and income gains have exceeded costs
That looks like some serious pie on the windowsill for oil and gas fans, but so far no-one has bothered to swipe it.
As of this writing, the American Petroleum Institute has not issued a statement of cheer for the findings, and a quick check of the Intertubes hasn’t turned up anything from other major stakeholders.
Aside from media reports, if you can find any major stakeholder organization with something positive to say about about the study and its findings, drop us a note in the comment thread.
Otherwise, a good guess would be that everyone was just leaving for an extended holiday vacation when the news came out.
And, that leads to the conclusion that the University of Chicago dropped an important study two days before Christmas Eve because everyone would be too busy to pay much attention to it.
You Can’t Fool FuelFix
A couple of news organizations did cover the release shortly after it went out, and that’s where you can find another reason why the oil and gas industry has been pretty quiet about the good news: it’s not so good, after all.
Our friends over at FuelFix ran with the press release on December 22, but they didn’t just repost it. Their headline was this…
Fracking benefits local economies, but drives up crime rates, study finds
…and their lede (fancyspeak for first paragraph) was this:
Hydraulic fracturing and the shale boom have provided many benefits for communities around the country, but the boom has also driven up local crime rates and decreased residents’ quality of life, according to a University of Chicago study released Thursday.
That’s much closer to the study’s actual content than the EPIC headline expresses. Here’s a snippet from the abstract for the full study:
…estimated willingness- to-pay (WTP) for the decrease in local amenities (e.g., crime and noise) is roughly equal to -$1000 to -$1,600 per household annually (-1.9% to -3.1% of mean household in-come). Overall, we estimate that WTP for allowing fracking equals about $1,300 to $1,900 per household annually (2.5% to 3.7%), although there is substantial heterogeneity across shale regions.
So, a couple of red flags there. One is that thing about crime and noise. The other is the “substantial” difference in impacts among the nine regions surveyed.
The study authors provide some additional caveats in a convenient research summary. Here are the relevant snippets (emphasis added):
This data indicates that the average local benefits from hydraulic fracturing outweigh the costs, though this may change as more information about the environmental and health impacts of hydraulic fracturing is revealed.
Average benefits likely also mask considerable variation in the costs and benefits that accrue to individuals within each community.
The authors also note that natural gas is “the least carbon intensive fossil fuel,” but they caution that full-on exploitation of global reserves could “potentially have negative climate implications.”
The other news organization that covered the press release was the Daily Caller. Predictably, that article downplayed the negative material and focused on the positives (not going to provide a link to the Daily Caller).
If you’ve found some other news articles that discuss the press release rather than just reposting it, drop a note in the comment thread.
Fracking Fans Behind New Fracking Report
There could be one other reason why the EPIC press release dropped into the media world with barely a ripple.
One of the authors of the study is the Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology, which posted a slight variation of the EPIC press release on its website.
CEEPR is supported in part by 20 or so energy stakeholders, including several with direct interest in the fracking industry: BP (which apparently has high hopes for its “innovative” new operation, according to an article in the Wall Street Journal), ConocoPhillips, and of course, ExxonMobil.
ExxonMobil is of particular interest because of its high profile lobbying efforts on behalf of shale gas. The company has vastly increased its shale gas holdings in recent years, it has been aggressively moving to knock coal out of the power generating sector, and its CEO Rex Tillerson has just been tapped to lead US foreign policy for the next four years as Secretary of State for the incoming
Trump Administration, pending confirmation.
The natural gas transportation industry is also represented at CEEPR, with support from TransCanada. According to a report last summer, the company has been waiting out the blockage its notorious Keystone XL tar sands oil pipeline project by expanding its pipeline network for shale gas.
Other supporters include utilities and energy companies with a substantial interest in cheap, abundant natural gas. This group includes several US companies that have been transitioning out of coal fired power plants: Duke Energy, Exelon Corporation, PSEG, and Southern Company.
Photo: Fracking by Martin Thomas via flickr.com, creative commons license.