Fracking: Do the Economics Justify the Risks?

Hydraulic fracturing, a process to release natural gas and oil from the ground, is the focal point of several controversies involving environmental law and policy, economic growth, and public health. Advocates see the process, known popularly as fracking, as a vast source of natural gas that can provide energy independence for the United States while potentially offsetting some of the many environmental downsides of coal, most notably high carbon dioxide emissions that contribute to climate change. Advocates also argue that fracking has the potential to spark a renaissance in U.S. manufacturing by boosting jobs based on lower-cost industrial inputs.

But those concerned with fracking’s environmental impact on air and water quality, along with its potential to delay adoption of more expensive sustainable energy sources, cite numerous reasons for limiting fracking’s development.

In an effort to illuminate some of the nuances of this energy debate, the Penn Wharton Public Policy Initiative recently held a seminar titled, “Fracking, Environmental Policy, and Economic Growth,” moderated by Sarah Light, a professor of legal studies and business ethics at Wharton. The other participants were: Kathryn Klaber, former CEO of the Marcellus Shale Coalition, the largest organization representing companies involved in Pennsylvania’s natural gas drilling boom; Scott Perry, deputy secretary at the office of oil and gas management at the Pennsylvania Department of Environmental Protection (DEP), and Trevor Penning, director of the Center of Excellence in Environmental Toxicology at the University of Pennsylvania Perelman School of Medicine.

There are many concerns about the impact of hydraulic fracturing on public health, safety and the environment, Light noted at the beginning of the discussion. That is not surprising given that fracking involves the high-pressure injection of water and chemicals into the ground to split shale rock apart to release the hydrocarbon sources that had been locked inside. “The rhetoric is heated on both sides,” Light said. “Not only is there disagreement about policy choices, but there is also sometimes disagreement about the facts underlying those policy choices.”

“Not only is there disagreement about policy choices, [but] there is sometimes disagreement about the facts underlying those policy choices.”–Sarah Light

Concerns about air and water safety have led officials in New York, Vermont and elsewhere to impose moratoriums on fracking. Other critics worry that fracking ultimately is a short-term economic fix that could, over the long term, crowd out investment in non-fossil fuels and sustainable alternative fuels, such as wind and solar energy, that find it difficult to compete on price. Some have noted that the relatively lower prices charged for energy produced via fracking do not reflect the substantial, negative environmental and health-related costs they impose on society and the environment. If those costs were accounted for, they say, then sustainable resources would look more price-competitive.

‘A Significant Impact’

The seminar discussion focused on answering three core questions about fracking in Pennsylvania: First, what economic impact does fracking have in the state? Second, what kinds of regulatory oversight exist statewide? And third, has there been enough research about the environmental risks to fully assess fracking’s impact on public health and safety?