Drilling Deeper into U.S. Energy Success

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Gas prices dropped from a peak of $3.70 per gallon in April 2014 to $2.02 in late January. The only comparable price drop in the past 20 years was in 2008 when SemGroup, a major US domestic oil distributor, filed for bankruptcy. Speculated causes of the price drop include the Eurozone crisis, producer competition in new markets, and significant increases in US production, principally through Hydraulic fracturing. Commonly referred to as fracking, hydraulic fracturing has come into prominence largely due to profit incentives in the US market, technological improvement, and energy security concerns.

Fracking has been extremely productive and has essentially pulled the US back from entrenched energy dependence on international sources. Because it yields both natural gas and crude oil, fracking is exceptionally versatile. For example, the Bakken Shale Formation, an underground rock formation in North Dakota and Montana, was estimated to yield only 151 million barrels of oil in 1995; recent advances in shale production through fracking have led experts to correct that estimate to 3.65 billion barrels.

Fracking is effective because it has been developed to reach previously inaccessible deposits and on a large scale. Technological advances include the option to angle the drill horizontally once a certain depth is reached, which allows for a greater spread of extraction. Such advances are reflected in current US unconventional oil production—mostly through fracking, which has increased from 100,000 barrels per day in 2003 to 2 million barrels per day in 2012. Shale energy production, which uses fracking extensively, has accounted for 95% of the growth in US domestic oil production and for all the growth of domestic natural gas production from 2011 to 2013. This fracking-driven growth in production has led to the US to become the largest producer of oil and natural gas in the world, overtaking Saudi Arabia and Russia.

The upswing in fracking, however, has not received been accompanied by regulatory standards. Exemptions have allowed fracking producers to forego the typical industry requirements, due a lack of regulation in state legislatures. The enforcement of the Clean Water Act, which applies to the toxic waste fluids produced by fracking, is left to the states, as is enforcement of laws that protect drinking water reserves.

Fracking is controversial, largely due to the potential environmental and health impacts. Because the technique relies on high-pressure chemical injection into subterranean expanses, groundwater contamination by these chemicals is a primary concern. In 2012, over 280 billion gallons of toxic wastewater were produced, leading to instances of water contamination throughout the US. In New Mexico, there were over 400 cases of contaminated groundwater discovered that same year. Contaminated drinking water certainly raises menacing health concerns.

Considering that nearly half of all states are now beginning to permit fracking through favorable legislation, legislators may view fracking as an effective, lower-cost energy alternative, to the detriment of the environment. The boost in domestic production will certainly continue to afford the US independence from foreign energy suppliers such as Saudi Arabia, but this independence may be at the expense of citizen health if not properly regulated.

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Aristides Hadjipanteli

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