The Importance of Fracking

Mark Green
Posted October 30, 2014

A new study details the essential tie between America’s ongoing energy revolution and advanced technologies of hydraulic fracturing and horizontal drilling. Specifically, virtually every barrel of domestic oil production growth over the past five years can be attributed to fracking and horizontal drilling – which has positively impacted global crude markets and saved consumers billions of dollars.

Kyle Isakower, API vice president for regulatory and economic policy, discussed the ICF International study during a conference call. The study calculates the impact of safe fracking and horizontal drilling on crude markets and prices at the pump. Isakower:

“Economists are still debating where the markets might go from here. But for the average consumer, there’s no question that America’s energy revolution has provided a welcome source of savings. … By comparing historical price and production data against a scenario without advanced drilling, it paints a clear picture of where we would be without the technology-driven energy revolution.”

Key findings:

• U.S. oil production from hydraulic fracturing/horizontal drilling increased to 4.78 million barrels per day in 2013, up from 750,000 barrels per day in 2008.
• International Brent crude oil prices were between $12 and $40 per barrel lower in 2013 than they would have been without U.S. fracking/horizontal drilling, ICF says.
• ICF estimates that international Brent crude oil prices would have averaged $122 to $150 per barrel in 2013 without increases in U.S. production of crude and condensates from fracking/horizontal drilling.
• U.S. petroleum product prices were between 29 cents and 94 cent per gallon lower in 2013 than they would have been without fracking/horizontal drilling, ICF says, saving consumers an estimated $63 billion to $248 billion. Cumulative savings from 2008 to 2013 were estimated by ICF at between $165 billion and $624 billion.

ICF found production from wells using hydraulic fracturing and horizontal drilling totaled 4.78 million barrels per day in 2013, accounting for 48 percent of all U.S. production, up from 11 percent in 2008. At the same time, government data shows U.S. oil production rose from 5 million barrels per day in 2008 to 7.4 million barrels per day – by coincidence, also an increase of 48 percent. ICF’s graphic:

“For the first time in generations, surging domestic production is driving our energy security and providing a crucial buffer against disruptions in Europe, Africa, and the Middle East. … Today, U.S. production is over 8.5 million barrels per day, 70 percent higher than the 2008 average, which shows that our energy revolution is just getting started.”

Isakower said the energy revolution producing benefits to the country and individual Americans isn’t a “lucky accident.” Rather, it’s the result of decades of American innovation and investment whose objective was to increase domestic energy production. Keeping the revolution going will depend on policy choices. Isakower:

“To build that momentum and strengthen our position as an energy superpower, it’s critical that policymakers turn aside duplicative regulations on hydraulic fracturing and ensure that U.S. consumers can benefit from energy production on federal lands that remain off-limits. We also must work quickly to solidify our role as an energy superpower by modernizing 70s-era trade restrictions that prevent U.S. oil from reaching global markets. Study after study has shown that lifting restrictions on free trade will drive more jobs, a stronger economy, and put downward pressure on fuel prices.”