Weekly Economic Report
Fracking, is it Worth it?
Ron Withall
Business 630, Dr. Lynn Reaser
SUBJECT
Our dependence on foreign oil and natural gas has created a vulnerability affecting our national security and economic stability. Up until this past decade there was an appreciable decline in our oil and natural gas production in the US and we were tied to world market price fluctuations. Oil prices and natural gas prices rose and fell based on OPEC’s and other large oil and natural gas producers’ production and pricing decisions. Beginning in 2005, things began to change in the US oil and natural gas industry. New technology called hydraulic fracturing or “fracking” made it possible to extract oil and natural gas from geological…show more content… In response to the quake and presumably in a move to prevent further quakes and damage, Oklahoma state regulators ordered 37 wastewater disposal wells to halt operations. This dramatic action maybe a sign of what’s to come. The question now is whether other states with fracking operations will follow suit. If a ban or moratorium is placed on hydraulic fracturing it is likely to appreciably change the oil and natural gas industry in this country and the economies within the affected states, the nation and our current relationships with other oil producing countries in the world.
IMPORTANCE
How does fracking and the oil and gas industry affect each of us personally? It is estimated that the oil and natural gas industry employs over 2.8 million people either directly or indirectly and employment in the industry, as a result of fracking, has grown substantially (Figure 3). In recent years we have seen oil and natural gas prices plummet due in part to hydraulic fracturing. Petroleum prices that were once over $4.00 at the pump are now hovering around $2.50. Natural gas prices have dropped dramatically (by 47%) since the fracking revolution. According to a report by Catherine Hausman and Ryan Kellogg on the “Welfare and Distribution Implications of Shale Gas”, natural gas production grew more than 25% between 2007 and 2013 driven by technology innovations in extraction (Figure 4). In