There’s no business like shale business, and shale business is booming. Nearly every single major energy company operating in the country right now reported profit growth in 2014’s second quarter, including (but certainly not limited to) GE, National Fuel Gas, Range Resources, American Electric Power, Anadarko, Chevron and ConocoPhillips. That’s profit growth, meaning not only did the companies make money, but more money than they had the previous quarter.
Lifetime shale production estimates continue to rise as well. The Marcellus and Bakken shales set new natural gas and crude oil production records, respectively, every month. Newly optimistic estimates of Utica shale gas totals have spurred a new round of development in the region, prompting the Energy Information Administration to add the shale to its monthly report on production from the nation’s most lucrative plays. As if that’s not enough, some states have recently approved fracking in hopes of tapping into untouched shales, as is the case in North Carolina and the Taylorsville Basin.
In short, energy companies are making a fortune from fracking, and it doesn’t look like their coffers are going to lighten anytime soon.
And yet, to hear some armchair industry-watchdogs tell it, the entire operation is poised on the brink of total collapse. The impetuses for these claims vary – modest environmental regulations, proposed taxes on production or standards for transparent reporting – but the story is always the same. Any action, be it by state government or advocacy group, that could potentially deduct even slightly from corporate profits will drive shale development out of the state, kill jobs, eliminate all income and throw the populace into chaos and poverty.
There’s nothing wrong with making money. The country’s economic and political system depend on it. The problem arises when the goal of totally maximized profit overrides every other concern.
We now know for certain that fracking can have a serious effect on the environment. Numerous incidents have seen drinking water contaminated by improperly handled wastewater. Deep injection wells have been conclusively linked to higher incidences of earthquakes. Just living near hydraulic fracturing has been proven to negatively affect the health of human beings and animals. Yet any attempt to study, let alone potentially limit, such health hazards is treated as an attack on the industry and therefore, unbelievably, on national security. Any movement away from total market dominance or energy independence, we’re told, means the terrorists win.
The shale boom and related boost in population has also incurred costs for every state that hosts major drilling operations. The increased truck traffic alone can do millions of dollars of infrastructure damage, to say nothing of the greater demand for social and medical services, schools, and law enforcement. Yet any attempt to offset these costs at light expense to the companies profiting off them is characterized as base greed.
Note that several states, including New Mexico, Alaska, Colorado, Wyoming and Montana have existing extraction taxes. They have not halted in-state energy production, nor caused the world to end.
This willingness to wave away any legitimate complaints as unfounded and unpatriotic isn’t just annoying. If left unchecked, it could create a national policy allowing energy companies to do whatever they want, wherever they want, consequences be damned. No other profit-driven entity is accorded similar autonomy and importance equal to or greater than state governments, with the possible exception of the NFL. Even the United States Postal Service doesn’t come close.
Companies are allowed to frack pretty much anywhere they want to, whether the local residents approve or not. What bans exist are largely symbolic and are generally only in areas that don’t host hydraulic fracturing anyway – does anyone think Beverly Hills, for example, is at the forefront of this debate? There are few viable options to oppose the construction of a pipeline across privately owned property, and even fewer to address concerns of air or water pollution near private property.
The energy industry isn’t selling pet rocks. It does not manufacture a fad that will fade in popularity over time. We will always need energy and a way to get it, and the edge it gives us in geopolitics ensures it will be well taken care of by the government.
The fact of the matter is that energy companies are making a killing on shale energy, and a few commonsense dampeners on their runaway momentum aren’t going to change that.
The consequences of letting an industry set its own rules were demonstrated aptly by a report released today that showed new jobs created since the recession are significantly lower-paying than the ones they replaced. If we allow big businesses to take as big a share as they want, we’ll have to contend ourselves with the table scraps they choose to throw to the rest of us.
Pro-business jingoism will relentlessly dictate a policy of maximum profits for corporations at the cost of absolutely everything else. Again, there’s nothing wrong with making money, but an industry that effects so many should not exclusively profit so few.
It’s worth noting that not every energy company will act immorally or cut corners. Some companies act responsibly, care for their communities and work their hardest to ensure the system benefits everyone. Unfortunately, experience has shown that some bad apples will do whatever they can get away with. Sensible oversight will simply ensure everyone plays by a fair set of rules. You can bet their wallets will survive the hit.