The High Cost of Fracking Regulation

In Europe, where fracking is heavily regulated or prohibited altogether, consumers pay more than twice for natural gas than what they do in America (currently $11.59 per mBtu vs $4.78).  As consumers, businesses, and electric utilities pay more, the result is a stalled economy and lower standard of living.  Thanks in part to its large investment in solar energy, Spain's per capita GDP in current U.S. dollars has dropped from $31,679 in 2010 to $28,624 in 2012.

Based on his recent words and actions, Obama wants the same for the U.S.

Over half the homes in America heat with natural gas.  Why would the president want to see their heating bills rise by 240%?  The answer, I believe, is that he has other priorities.  The standard of living of ordinary Americans is near the bottom of his list.  Donations from wealthy environmentalists are near the top.

Since winning re-election, Obama has gone out of his way to signal his support for greater regulation of fracking at the federal level.  His choice for EPA director, Gina McCarthy, stated shortly after her confirmation that with regard to fracking, she supports "regulating emissions."  That's in addition to EPA's misguided efforts to link fracking to groundwater pollution.

It appears that every federal agency is out to challenge fracking.  In the next six months, the Interior Department is scheduled to release new regulations for fracking on federal lands.  The EPA has also indicated that it intends to "study fracking" in 2014.  The Fish and Wildlife Service has been adding new candidates to its list of endangered or threatened species, an action that can significantly limit energy exploration and other development by setting aside critical habitats.  Meanwhile, OSHA is moving forward with stricter rules on workplace exposure to crystalline silica.  These proposed rules would cut exposure limits by 500% for many companies, including many involved in fracking.  Everywhere you look, Obama is blocking domestic oil and gas production.

Make no mistake: Obama's war on fracking will drive energy prices up, and 240% will be just the beginning.  What's happened to gas prices in the spot market lately should be a warning.

This winter, Henry Hub spot prices have risen above $6 per mBtu for the first time in years, with delivered gas prices rising above $30 in some precincts.  What would have happened if fracking had been made economically unviable, as Obama apparently wants to see happen?

It's possible to calculate just such a scenario based on the price of natural gas before and after fracking.  In 2005, gas prices reached $14 per mBtu before falling to a low of just under $2 in 2011.  Widespread fracking brought the price of natural gas down by 700%.  Significant limitations on fracking, or outright bans of the sort that exist in New York and other states, could raise prices by 700%.

How would a large increase in natural gas prices affect the U.S. economy?  This year, many households are facing January home heating bills of $400 or more.  Multiply $400 by seven: how can the average family handle a $2,800 monthly heating bill, or even one of $960, as it would be right now in Europe?  There would be hardship, bankruptcy, and unemployment on a massive scale.  The national economy would stagnate, as it has in Europe.  And the poor and middle class would suffer the most.  Aren't the lives of ordinary Americans more important than campaign contributions from environmental groups? 

The Obama administration doesn't seem to think so.  Nowhere, so far as I can tell, in all of the millions of words coming out of the White House is there a single sentence about the burden of environmental regulation on ordinary Americans.  Never has a president talked so much about helping the poor and middle class and done so much to harm them.  Obama's energy policies are the product of environmental elitism on steroids. 

If Obama wished to help the poor and middle class, he would begin by lowering the cost of basic goods, including energy.  His support for increased regulation indicates that he has no intention of doing so.

For one thing, if the president really wished to support increased natural gas production, he would stop talking about natural gas as a "bridge fuel," as he did once again in his State of the Union address.  He would recognize natural gas as a long-term solution to America's energy needs.  Natural gas is not a "bridge" to "clean fuels."  It is itself a clean fuel, and the only one that makes economic sense.  

Obama's score on promoting domestic oil and gas is zero -- or worse than zero.  His 2014 SOTU speech devoted all of one short paragraph to natural gas -- and none to the goal of increasing domestic oil production.  And what he said about natural gas was not encouraging.  There was an ominous statement about "working with the [oil and gas] industry to sustain production and jobs growth while strengthening protection of our air, our water, our communities."  And then Obama added: "And while we're at it, I'll use my authority to protect more of our pristine federal lands for future generation."  In other words, don't expect new permitting for exploration on federal lands any time soon.

And don't expect lower heating bills as long as liberals control Washington.  There are 310 million Americans who depend on domestic energy production for their well-being.  The awful truth is that this administration does not care about the welfare of those 310 million Americans.  In terms of energy policy, they seem to care only about those, including well-heeled environmentalists, who contribute to Democratic Party coffers.

By the time this brutal winter is over, most Americans will realize how important the price of natural gas really is.  If they want to keep prices low -- and drive them lower -- they should speak out against Obama's plans for more regulation.    

Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2011).

In Europe, where fracking is heavily regulated or prohibited altogether, consumers pay more than twice for natural gas than what they do in America (currently $11.59 per mBtu vs $4.78).  As consumers, businesses, and electric utilities pay more, the result is a stalled economy and lower standard of living.  Thanks in part to its large investment in solar energy, Spain's per capita GDP in current U.S. dollars has dropped from $31,679 in 2010 to $28,624 in 2012.

Based on his recent words and actions, Obama wants the same for the U.S.

Over half the homes in America heat with natural gas.  Why would the president want to see their heating bills rise by 240%?  The answer, I believe, is that he has other priorities.  The standard of living of ordinary Americans is near the bottom of his list.  Donations from wealthy environmentalists are near the top.

Since winning re-election, Obama has gone out of his way to signal his support for greater regulation of fracking at the federal level.  His choice for EPA director, Gina McCarthy, stated shortly after her confirmation that with regard to fracking, she supports "regulating emissions."  That's in addition to EPA's misguided efforts to link fracking to groundwater pollution.

It appears that every federal agency is out to challenge fracking.  In the next six months, the Interior Department is scheduled to release new regulations for fracking on federal lands.  The EPA has also indicated that it intends to "study fracking" in 2014.  The Fish and Wildlife Service has been adding new candidates to its list of endangered or threatened species, an action that can significantly limit energy exploration and other development by setting aside critical habitats.  Meanwhile, OSHA is moving forward with stricter rules on workplace exposure to crystalline silica.  These proposed rules would cut exposure limits by 500% for many companies, including many involved in fracking.  Everywhere you look, Obama is blocking domestic oil and gas production.

Make no mistake: Obama's war on fracking will drive energy prices up, and 240% will be just the beginning.  What's happened to gas prices in the spot market lately should be a warning.

This winter, Henry Hub spot prices have risen above $6 per mBtu for the first time in years, with delivered gas prices rising above $30 in some precincts.  What would have happened if fracking had been made economically unviable, as Obama apparently wants to see happen?

It's possible to calculate just such a scenario based on the price of natural gas before and after fracking.  In 2005, gas prices reached $14 per mBtu before falling to a low of just under $2 in 2011.  Widespread fracking brought the price of natural gas down by 700%.  Significant limitations on fracking, or outright bans of the sort that exist in New York and other states, could raise prices by 700%.

How would a large increase in natural gas prices affect the U.S. economy?  This year, many households are facing January home heating bills of $400 or more.  Multiply $400 by seven: how can the average family handle a $2,800 monthly heating bill, or even one of $960, as it would be right now in Europe?  There would be hardship, bankruptcy, and unemployment on a massive scale.  The national economy would stagnate, as it has in Europe.  And the poor and middle class would suffer the most.  Aren't the lives of ordinary Americans more important than campaign contributions from environmental groups? 

The Obama administration doesn't seem to think so.  Nowhere, so far as I can tell, in all of the millions of words coming out of the White House is there a single sentence about the burden of environmental regulation on ordinary Americans.  Never has a president talked so much about helping the poor and middle class and done so much to harm them.  Obama's energy policies are the product of environmental elitism on steroids. 

If Obama wished to help the poor and middle class, he would begin by lowering the cost of basic goods, including energy.  His support for increased regulation indicates that he has no intention of doing so.

For one thing, if the president really wished to support increased natural gas production, he would stop talking about natural gas as a "bridge fuel," as he did once again in his State of the Union address.  He would recognize natural gas as a long-term solution to America's energy needs.  Natural gas is not a "bridge" to "clean fuels."  It is itself a clean fuel, and the only one that makes economic sense.  

Obama's score on promoting domestic oil and gas is zero -- or worse than zero.  His 2014 SOTU speech devoted all of one short paragraph to natural gas -- and none to the goal of increasing domestic oil production.  And what he said about natural gas was not encouraging.  There was an ominous statement about "working with the [oil and gas] industry to sustain production and jobs growth while strengthening protection of our air, our water, our communities."  And then Obama added: "And while we're at it, I'll use my authority to protect more of our pristine federal lands for future generation."  In other words, don't expect new permitting for exploration on federal lands any time soon.

And don't expect lower heating bills as long as liberals control Washington.  There are 310 million Americans who depend on domestic energy production for their well-being.  The awful truth is that this administration does not care about the welfare of those 310 million Americans.  In terms of energy policy, they seem to care only about those, including well-heeled environmentalists, who contribute to Democratic Party coffers.

By the time this brutal winter is over, most Americans will realize how important the price of natural gas really is.  If they want to keep prices low -- and drive them lower -- they should speak out against Obama's plans for more regulation.    

Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2011).