Fracking Ban Could Cripple U.S., New Study Finds
Posted February 27, 2020
We’ve been making the point that political chatter about banning safe hydraulic fracturing and ending federal natural gas and oil leasing simply doesn’t make sense when you think about how far the U.S. has come in recent years – economic growth, increased energy security and consumer benefits – because of modern fracking, which is used for 95% of new wells in the U.S. today.
Thanks to a new study, we now know what that America would look like, and the picture isn’t good.
A new economic analysis conducted by OnLocation shows that if some politicians get their way and ban fracking and federal natural gas and oil leasing, the consequences could be crippling:
- U.S. economy likely falling into recession with millions of jobs sacrificed
- Consumers hit by higher energy costs across the board
- A nation increasingly dependent on foreign energy
The study was conducted because banning fracking and federal leasing is regularly being pushed by some candidates on the presidential campaign trail. The study makes clear such rhetoric borders on nonsense. API President and CEO Mike Sommers:
“If I told you about a technology that would help the environment, that would help American consumers, would reduce our trade deficit and increase American jobs, I think most politicians would jump on that, not try to ban it.
“American families should be shocked to hear proposals from candidates for high office that would ban this transformative technology, which would erase a generation of American progress and return us to the days of heavy reliance on foreign energy. There is perhaps no better example that points to the stark contrast we see today in the debate over America’s energy future.”
Let’s look at the study in more detail, which compares the no fracking/no leasing scenario with the U.S. Energy Information Administration’s Annual Energy Outlook Reference Case (2019R).
- U.S. economic recession could be triggered, with GDP reduced by $1.2 trillion in 2022 compared to AEO 2019R.
- $7.1 trillion in cumulative GDP loss from 2020-2030.
- 7.5 million jobs lost in 2022 (4.8% of total jobs), averaging 3.8 million jobs lost through 2030.
- Trade deficit increased by a cumulative $3.1 trillion through 2030.
- Annual household income declines, on average, $5,040 per year.
These are potential impacts well beyond the energy industry itself, affecting sectors and users of energy all across the economy. Frank Macchiarola, API senior vice president for policy, economics and regulatory affairs:
“For 2022, this study is talking about job losses estimated to be nearly three times higher than the worst year of the Great Recession. This is really devastating, potentially. … It’s not just about energy jobs, it’s all of us.”
Household Energy Costs
- American households spend $618 more per year on energy, on average, even while consuming 12% less energy.
- Residential natural gas prices average 58% higher.
- Gasoline prices average 15% higher.
- Electricity prices average 20% higher per family, per year.
- Residential heating oil prices average 15% higher.
A fracking/leasing ban would dramatically reverse the trajectory of U.S. energy security and America’s global energy leadership. The U.S. would cast aside increasing energy self-sufficiency and replace it with increasing energy dependence on foreign suppliers:
- The U.S. returns to dependence on foreign suppliers for more than 40% of its oil needs by 2030.
- U.S. shifts from being a net exporter of natural gas to needing foreign imports for almost 30% of its natural gas by 2030.
U.S. farmers would be especially harmed by a fracking/leasing ban because of increased costs for energy in an energy-intensive sector:
- Total cumulative lost farm income exceeds $275 billion.
- Average annual farm income loss is more than $25 billion.
- Farm income declines 43%.
- Cost of wheat farming increases 64%.
- Cost of corn farming increases 54%.
- Cost of soybean farming increases 48%.
Individually, these are stark scenarios, and together depict an America thrown suddenly into reverse, with limited resources and shrinking options. The U.S. would be weaker, economic opportunity would decrease and consumers would see disposable income fall. Lessly Goudarzi, founder and CEO of OnLocation:
“You can’t eliminate the very technology that has enabled the American energy revolution without damaging economic consequences. As our analysis shows, assuming a full ban on fracking would threaten a U.S. recession and force American consumers to rely more on foreign energy rather than energy produced here in the U.S.”
Let’s wrap up with a pair of videos that help drive home the real-world consequences of a ban on fracking and federal leasing – first, on U.S. households and second, on American jobs and manufacturing:
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.