Amanda Weinstein and Mark Partridge, two Ohio State University economists, have published a report titled “The Economic Value of Shale Natural Gas in Ohio.” The report’s primary emphasis is on statements made by industry-funded studies related to the employment benefits of natural gas extraction from the Marcellus and Utica Shales.
While I think their analysis understates the employment benefits of responsible natural gas development, the larger issue with their report occurs when the authors step outside of their expertise to analyze the costs and benefits of natural gas more generally. This section systematically understates the benefits of natural gas, selectively cites literature without acknowledging recent research, and misrepresents the industry’s current response to chemical disclosure.
No Effect on Energy Security?
The report views energy security as being solely a problem of oil imports, but this viewpoint is simplistic and does not account for the greater energy security benefits attained through global supply shifts.
A Department of Energy-funded study produced by the Baker Institute for Public Policy Energy Forum addressed this very topic in depth in July 2011. Some of the most significant energy security findings were that shale development:
- Reduces competition for liquefied natural gas (LNG) supplies from the Middle East, thereby moderating prices and spurring greater use of natural gas, an outcome with significant implications for global environmental objectives.
- Combats the long-term potential monopoly power of a “gas OPEC” or a single producer such as Russia to exercise dominance over large natural gas consumers in Europe or elsewhere.
- Reduces the opportunity for Venezuela to become a major LNG exporter and thereby lowers longer-term dependence in the Western Hemisphere and in Europe on Venezuelan LNG.
- Reduces Iran’s ability to tap energy diplomacy as a means to strengthen its regional power or to buttress its nuclear ambitions.
These benefits have been recognized by the Shale Gas Production Subcommittee of the Secretary of Energy Advisory Board, a multi-stakeholder panel convened by the Obama administration, and have led MIT researchers to suggest greater market liquidity as a result of shale gas extraction will “contribute to security by enhancing diversity of global supply and resilience to supply disruptions for the U.S. and its allies.”
For the authors to understate such a significant benefit so flippantly suggests a lack of knowledge or a desire to direct attention away from the benefits of natural gas.
Greenhouse Gas Emissions and Fracking
Weinstein and Partridge cite the highly discredited Howarth 2011 study without any reference to the numerous, substantive critiques that emerged following its release. I wanted to discount this as a review error; things emerged later in the publishing process that the writers may have missed. But the following paragraph references EPA’s recent allegations of Wyoming water pollution, which suggests the paper was updated very recently. Their statement insinuates the same conclusions as the Howarth study, without directly validating it. The authors would have been better off citing one of the many alternatives that have emerged since.
Fracking Fluid and Voluntary Disclosure
Somewhat in passing, Weinstein and Partridge make accusations about unknown toxic chemicals that are present in hydraulic fracturing fluid that companies “have continually refused to disclose for proprietary reasons.” This may have been the case in years past, but industry groups, such as the Marcellus Shale Coalition, have pledged to voluntarily disclose their chemicals through fracfocus.org. According to the most recent records, Chesapeake Energy (the largest player in the region) has already voluntarily disclosed the contents of its fracturing fluid in all of its horizontal wells that are either completed or producing natural gas.
I’m not saying chemical disclosure is not warranted, but to stoke fears of chemical contamination without recognizing voluntary initiatives as well as the current regulatory trajectory, serves only to suggest sinister motives that have not proven to be true.
The economic analysis of Weinstein and Partridge is important in providing another data point into the projected employment benefits of hydraulic fracturing, but their skewed analysis in placing those benefits within the larger context is lacking and should be revised to reflect a higher standard of research.