Fracking Fraud


Hucksters for high volume hydraulic fracturing with horizontal drilling, the intensely industrial process by which x percent of natural gas and oil are mined in the United States today, loudly tout multiple benefits of the practice. Fracking reduces dependence on imports of crude oil. It generates jobs, profits and tax revenues. Fracked gas burns cleaner than coal, reducing smog and carbon pollution. Fracking leads to lower prices for gasoline and other petroleum products. It’s a variant of the last claim I examine here.

I live in Upstate New York, a place spared the direct ravages of hydrofracking by an especially vigorous years long opposition campaign that led Governor Andrew Cuomo to “ban” the process in 2014 (the next governor could reverse Cuomo’s decision). The state still suffers myriad indirect insults from fracking, including mile-long oil trains from the Bakken Shale, and a network of proposed pipelines, storage facilities and giant compressors to move fracked gas from Pennsylvania to New York and New England. Setting aside the grievous environmental damage of pipeline construction and the ‘round-the-clock threat of another Lac Megantic, New Yorkers were supposed to benefit from the lower costs of heating fuels promised by fracking supporters.

Northeasterners use a wide variety of fuels to ward off the winter chill: electricity, wood, corn, pellets, propane, kerosene, oil, natural gas, even coal. Natural gas is most common. Despite the promises, fracking has not prevented spikes in fuel costs. In recent years, several severe winters caused heating oil and electricity prices to skyrocket.

Given the flood of fracked gas from shale formations as close as the Marcellus, the price ought to have followed that of gasoline. Yet, while current wholesale natural gas prices are twenty-four percent lower than last year, Capital Region of New York customers of National Grid (the local utility) can expect a two percent drop in their bills. That adds up to about $12 for the average household over the five-month heating season. The price of electricity—also mostly generated by burning natural gas—is slated to drop four percent, thinks National Grid, saving the average user $17. Some significant portion of the savings is due not to the utility passing its lower costs on to consumers but to a predicted drop in demand from what’s forecast to be a milder winter.

The utility blames a regressive state tax for its inability to pass on lower costs. But the tax, known as 18 (a) and first enacted in 2009, adds but six cents to the price of a therm of gas this year, and is to be phased out over the next two years (though it would not be surprising if it lived on; it was supposed to sunset already). The larger point is that all surcharges (including, for electric bills, the systems benefit charge, renewable portfolio standards charge, and the gross receipts tax) make up but a small percentage of a utility bill. “Commodity” charges and “delivery” charges dwarf the surcharges on a utility bill.

The upshot? All the messes made by and left behind by fracking for natural gas—the polluted air, water, and land, the depleted aquifers, the ruined roads, the human health effects, the boom and bust cycles—will save National Grid customers less than thirty bucks this winter. And that’s if the predictions are accurate. Should supplies again tighten and the temperature plunge, even these measly savings will evaporate.

How is this a sane energy policy? Long-term thinking?

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Steve Breyman was a William C. Foster Visiting Scholar Fellow in the Clinton State Department, and serves as an advisor to Jill Stein, candidate for the Green Party presidential nomination. Reach him at breyms@rpi.edu

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