As natural gas production increases, its production process, known as hydraulic fracturing, or “fracking,” has become the subject of a major fight in environmental policy.
The feasibility of natural gas production has grown because of two major innovations. First, horizontal drilling allows wells to access 60 times more below-ground area while being 30 percent of the size of natural gas wells in the 1970s. Secondly, the introduction of fracking has unlocked more gas for collection. This involves injecting pressurized water, sand and chemical additives through steel tubes more than a mile below the earth’s surface to release natural gas, which then rises to the surface within a self-contained system.
But the economic benefit is not without drawbacks, as its negative impact on social and environmental factors can be significant. The production technique has been debated in the public and private sectors. However, what has made fracking even more of a divisive issue is the imbalance of information between the gas producers and those whose land is affected by it. In economics, this is called information asymmetry.
Information asymmetry is when one party has better information than the other; often the information is withheld from the ignorant party in order to gain the upper hand in negotiation. This scenario produces market failures, negative externalities and social malevolence. In the case of fracking, the gas producers are backed by special interest groups that benefit from leaving negative health and environmental concerns out of the equation. And unfortunately, the current regulations make it difficult for landowners to realize the dangers fracking poses to their health and drinking water.
Googling the term “fracking,” produces pro-fracking websites that say the process creates, “more jobs, less dependence on foreign oil and a cleaner, smarter energy future for our nation.” It all sounds good, but what about the actual process? None of these sources describe anything wrong that may result from fracking practices. The talking points of special interest group America’s Natural Gas Alliance underscore this problem.
ANGA says natural gas is subject to EPA regulations that govern natural gas drilling and techniques like fracking. Yet, in 2004, the EPA study that found fracking poses “little or no threat” to drinking water was shown to be scientifically unsound and therefore required further revision. In 2005, a national energy bill championed by Dick Cheney included an exemption of hydraulic fracturing from the Safe Drinking Water Act. There are several concerns that arise from this fact.
Cheney is the former CEO of Halliburton — the company that patented hydraulic fracturing in the 1940s and remains one of the country’s largest manufacturers of fracturing fluids. This special interest of Halliburton was actively implicated in the review of the 2004 EPA report. Sounds like someone had something to hide when they took on the study.
By excluding fracking from the Safe Drinking Water Act, the government declined to require companies to disclose which chemicals were being injected into natural gas wells. A fracking well can produce more than a million gallons of wastewater often laced with highly corrosive salts, carcinogens like benzene and radioactive elements like radium. Once again, special interest groups undercut the system by using political and monetary advantages to ensure the creation of policy in their best interests, not those of American citizens.
And that is my point: Free markets are driven by the ugly motive of greed. The natural gas industry is using information asymmetry to focus on the positives of increased natural gas production while hiding the social malevolence it may cause people. Issues like unhealthy drinking water, radioactivity and the burning of volatile organic compounds in wastewater treatment are being left out of natural gas energy policy.
I’m not a tree hugger, nor am I saying that we should stop investment in cleaner energy that can save us from our addiction to fossil fuels. But there is a better way to go about developing industry. All information should be laid on the table when creating policy that affects American citizens economically and socially.
The strength of special interest groups is undermine the interests of everyone else. The government should take steps toward regulation that alleviates the problems caused by this asymmetry, not further the imbalance of information. Many Americans fear Big Brother taking over our lives, but what happens when Big Brother and Big Business join together it may be worse than we could imagine.