Drill-Baby-Drill – But Responsibly and Sustainably

Really good news in the Wall Street Journal this week on the bump in economic activity from the U.S. shale gas boom, Germany’s BASF Investing to Tap U.S. Shale Gas Boom.  According to the report, BASF plans to increase investment by dreamstime_l_34606371 (1)expanding and building new plants here in the U.S. at the tune of $1B per year – up from $500M.  This, in addition to $4B in capital spending in the U.S. through 2017.   This means more jobs and economic growth here in the states.   So why is this German titan doing more business in the U.S. you ask?

The lure:  cheap electricity and natural-gas prices.  Thanks to discoveries of shale-gas in Texas, North Dakota and Pennsylvania, the U.S. price of natural gas is about $4.30 a million British Thermal Units, about one-third of the price paid by German industry.

We have George Mitchell, the inventor of fracking, to thank for these positive developments.  Mitchell, who died in July of this year at the age of 93, never gave up on his idea to extract oil and gas from the earth that others thought impossible to reach.   Human innovation and ingenuity at its best.   Cheaper electricity isn’t also good for business, it’s good for the working poor and families whose energy costs, as a percentage of after-tax income, have continued to escalate over the last two decades.

Energy costs for residential utilities and gasoline are straining low- and middle-income family budgets.  [T]he average American family with an after-tax income of $53,092 will spend an estimated $5,907 on energy in 2013, or 11% of the family budget.  The 60.5 million households earning less than $50,000 – representing 49.9% of U.S. households – will devote an estimated 20% of their after-tax incomes to energy, compared with an average of 9% for households with annual incomes above $50,000.

Lastly, while fracking portends great news for families and communities, it also must be done in a responsible and sustainable fashion.   I bring your attention to the new Center for Sustainable Shale Development, based in Pittsburgh – a collaborative between industry, academia, and environmental groups, such as the Pennsylvania Environmental Council and the Environmental Defense Fund.   Among other things, the collaboration is focused on developing performance standards and certifications, which would serve as the basis for third-party auditing.   It’s critical that the industry continue to be responsive and proactive to social and environmental concerns that so often give fracking a bad name.  Fracking can and must be done safely.   And EPA (link to EPA website here) and the states must continue to ensure, through proper oversight, that the environment and public health are protected.