How I Learned to Stop Worrying and Love Fracking

Critics of hydraulic fracturing say economic and energy security shouldn't come at the expense of the environment. The controversial practice, dubbed fracking, has become the cause du jour in advocacy circles. A report from Colorado-based IHS, however, finds the oil and natural gas boom in the United States is starting to bring benefits to American families. IHS said increased energy production in the United States could put more money in the pocketbooks of U.S. families and add strength to an already recovering job market. The Energy Department, meanwhile, says that, relatively speaking, natural gas is one of the best fuel options around because of its low carbon intensity. The economic and environmental attributes aren't enough to quiet fracking opponents, however.

The U.S. Energy Department's Energy Information Administration said in a monthly report for August the United States imported 1.4 million cubic feet of natural gas during the first six months of the year. That's down more than 20 percent compared to the same period in 2011. In terms of marketed production of natural gas, the EIA said the United States posted nearly 12.6 million cubic feet for the six months of the year, an 8.2 percent increase from the same period in 2011.

IHS said the steady increase in oil and natural gas production means economic gains are starting to trickle down to American families. Last year, energy companies added millions of barrels worth of production to their U.S. portfolios through hydraulic fracturing. IHS said the energy boom added more than 2.1 million direct and indirect jobs to the U.S. economy last year. That should reach the 3.3 million mark by the end of the decade. For actual monetary gains, increased wages and lower energy and manufacturing costs should add another $2,000 per year to American incomes by 2015, an increase of more than 60 percent from last year.

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Supporters of hydraulic fracturing say the practice has been around for decades with few problems. The process employs huge quantities of water, sand and a trace amount of harmful chemicals used to coax oil and natural gas out of underground shale formations. Last week, the U.S. Geological Survey said hydraulic fracturing fluids spilled into a Kentucky creek killed off the federally threatened Blackside dace, a small species of minnow. Drilling was also blamed for small tremors in parts of the U.S. Midwest and the EPA is investigating groundwater wells to see if anything associated with fracking has contaminated drinking water supplies. Those threats have sparked concerns that fracking isn't worth the economic benefits.

IHS said U.S. utility companies have idled more coal-fired power plants as a result of the natural gas boom. It said in a recent report that many of the environmental concerns are either overstated or unfounded. The Energy Department said fossil fuels should meet 80 percent of the global demand for energy through 2040. Advocacy groups say that's precisely the problem with fracking, though, at least in terms of natural gas, the EIA said it's an "environmentally attractive fuel compared with other hydrocarbon fuels." The Energy Department said it's also the fuel of choice when it comes to efforts to stem greenhouse gas emissions, an issue at the heart of fossil fuel critics. While environmental groups are right to fret over long-term projections for fossil fuels, for natural gas it may be a case of a simple fear of nothing more than change.

By. Daniel J. Graeber of Oilprice.com