An interesting story this week from Associated Press reporter Kevin Begos shed light on the origins of hydraulic fracturing, the controversial natural gas drilling technique under review by the state Department of Environmental Conservation.
Fracking has made it possible for drilling companies to tap into gas deposits hidden in hitherto-inaccessible shale formations. The technique is controversial because of the environmental risks it poses. What's not at dispute is that it has opened up new areas for gas development. As a result, natural gas production in the United States has reached record levels.
The American Enterprise Institute would have us believe these innovations were the result of free-market capitalism that happened “away from the greedy grasp of Washington,” according to an essay published this year. Had the feds seen the shale gas boomv coming, it argued, “surely Washington would have done something to slow it down, tax it more, or stop it altogether.”
This narrative stands in stark contrast to the facts. The federal Department of Energy provided more than $100 million – and billions more in tax breaks – for drilling firms pioneering the technique as early as 1975. In fact, the government-funded research into fracking ran contrary to the prevailing wisdom within the industry, according to geologist Dan Steward, who worked for Texas-based Mitchell Energy in 1981.
“There’s no point in mincing words. Some people thought it was stupid,” Steward said, adding that “probably 90 percent of the people” at his company thought shale drilling was unfeasible, and the experiment didn’t turn a profit until the 36th well was drilled.
With an election only weeks away, we need to have a frank discussion about the future of U.S. energy consumption. This debate is tainted by the notion that renewable energy sources, such as wind and solar power, are folly that depend entirely on government largesse, while fossil-fuel producers are hardy, independent wealth-creators who need only for federal bureaucrats to step out of the way to usher in prosperity.
Innovation requires risk-taking, but that risk can deter firms from experimenting with promising new ideas. Creating a broad range of energy sources that’s able to prevent the sort of supply shocks to which the U.S. is becoming increasingly vulnerable will require some experimentation.
Government funding for the sort of research and development that can benefit the entire country is a worthwhile and practical use of taxpayer money, whether it's natural gas development or renewable energy. A reasonable energy policy should include all the options - and should be honest about it.