19 Dec Special Briefing: Fracking’s Achilles Heel — Economics
December 18, 2013 –
Despite claims from industry that fracking is an economic goldmine, a deeper analysis of fracking’s economics turns up a pretty bleak picture.
Economic experts Richard Heinberg and Deborah Rogers recently gave an in-depth pretension on how economics is truly fracking’s Achilles heel. You can view the recorded presentation below.
A brief summary of some of the facts presented include:
- Despite the so called boom in fracking, since 2005, oil production has only increased 2.5% total worldwide.
- There were approximately 181,000 direct jobs from the oil and gas industry in 2011, and oil and gas accounted for approximately 45% of total energy generation capacity. Renewables represented approximately 183,000 direct industry jobs in 2011 and 15% of total energy generation capacity.
- Today’s oil and gas drilling and fracking is energy intensive, requiring about one barrel of crude oil in order to extract less than five barrels out of the earth. Historically, one barrel could extract as much as 100 barrels of crude in conventional oil drilling.
- In some states, the amount of severance taxes collected from the oil and gas industry isn’t even enough to repair the road damage caused by the industry’s heavy trucks. In Arkansas, $182 million in revenue was collected, but there was $450 million in road damage. In Pennsylvania, there was $204 million in revenue, but $3.5 billion in road damage. And perhaps the most alarming case, in North Dakota, the state has collected $1.3 billion in taxes, but has seen a whopping $7 billion in road damage.
- For a local example of the amount of revenue from the industry, in 2008, the City of Fort Worth, Texas received $50 million in revenues from 44 shale gas wells. In 2012, the city received only $23 million from 397 wells.
- The industry is trying to ship more natural gas oversees to pad their own balance sheets. While the cost of natural gas has been hovering between $3 and $4 during 2013, it would sell for as much as $18 oversees. And it would only cost $9, fully costed, to ship it there, resulting in much higher profits for the industry.