By Tim Mullaney
Sen. Elizabeth Warren’s campaign has yet another program and another slogan — this time, she wants to ban fracking, the still-new technology in oil and gas drilling. Fracking produced the most energy-independent U.S. in modern history, cut inflation, boosted workers’ real incomes — and vastly reduced the most obvious cause of climate change, electrical utility emissions.
Other than that, banning it is brilliant!.
The cause, of course, is preventing climate change, which mostly comes from burning fossil fuels like coal, oil and gas. It’s true that the day when fracking will be obsolete is coming into focus: Wind power is now cheaper for new utility plants than building gas-powered plants, according to the Rocky Mountain Institute, whose leaders did an excellent piece that ran on MarketWatch last week. And electric cars are coming soon in numbers that will drive gasoline demand far lower.
But they aren’t here yet. And the costs of a rapid, bumpy transition would be too high — in jobs, corporate profits and household budgets. But mostly in terms of the fact that there is no alternative available yet that can instantly run everything that fracked oil and gas power do now.
“The U.S. has gone from producing 5 million barrels per day of crude oil to 12 mbpd on the back of hydraulic fracturing,” Moody’s Analytics energy economist Chris Lafakis says. “U.S. crude oil production would nosedive over a two-year period. This would cause a sharp escalation in oil prices at a time when the global economy is struggling to grow.”
About two-thirds of U.S. oil and gas is produced by fracking. It’s responsible for all of the increase in U.S. production since 2008, which has helped shave almost $100 off the cost of a barrel of oil /zigman2/quotes/209723049/delayed CL00 +0.12% and $1.50 per gallon of gasoline. Cheap natural gas also helped utilities double the share of power made with hydro, wind and solar technologies to 18% without raising rates. The gas power offset more expensive renewables even before costs to build wind and solar plants fell more recently.
Natural gas used to make electricity has half the carbon of coal — so both gas and renewables, for now, contain carbon emissions by replacing coal-fired juice. By 2050, renewables will replace most gas and nearly eliminate emissions in electricity-making, forward-looking utilities like Xcel Energy say, and can cut emissions 80% by 2030.
Utilities have already cut U.S. carbon utility emissions 27% since 2005, according to the Edison Electric Institute, a trade association, in line with goals in the Paris climate accord. A long list of utilities say like Southern Co. /zigman2/quotes/208000495/composite SO -1.33% , Duke Energy /zigman2/quotes/201480230/composite DUK -1.95% and DTE Energy /zigman2/quotes/205073403/composite DTE -3.30% they can cut carbon to half of 2005 levels by 2030.
Coal’s share of electricity has fallen to the low 20s from 50%. As long as that’s above zero, both gas and renewable electricity can reduce carbon.
But it took a decade to build enough wind plants to boost wind’s share of electricity to 8% from 2%. To shut natural gas plants entirely, as a fracking ban implies, you’d need at least a decade to build enough capacity to absorb gas’s 35% of electricity demand, let alone coal’s rump share.
Cars are even farther from a solution.
The most optimistic experts think electric vehicles will be cheaper than internal combustion engine-powered versions by the mid-2020s, as hundreds of new models hit the market. (Until then, tax credits can make up some of the difference, but they are expiring for EV pioneers like Tesla /zigman2/quotes/203558040/composite TSLA +4.42% and General Motors /zigman2/quotes/205226835/composite GM -1.32% ).
Then, since cars stay on the road for about a decade, and not everyone will buy EVs immediately, there will be a 20-year period where an appreciable (but steadily diminishing) number of cars need oil.
Those two sources — electricity and transportation — account for most U.S. carbon emissions. And we can’t go cold turkey on either one of them.
There’s also the matter of replacing the 159,000 jobs in oil and gas that were added between 2008 and 2016. But those jobs are at risk anyway. Take it from an old newspaper reporter: When the new thing (in my case, Google /zigman2/quotes/205453964/composite GOOG -2.38% /zigman2/quotes/202490156/composite GOOGL -2.42% advertising; for gas drillers like Exxon Mobil /zigman2/quotes/204455864/composite XOM -1.61% or Chevron /zigman2/quotes/202718987/delayed XE:CHV +0.79% , wind power) becomes a better economic mousetrap, no politician is saving your job.
The better way — politically and substantively — is for a president taking office in 2021 to plan for about a 10-year transition,.
This means keeping tax subsidies that have already helped push the effective cost of renewable power and electric vehicles lower, but are slated to phase out. South Bend Mayor Pete Buttigieg, for example, has proposed boosting the $7,500-or-less tax credit for EVs to $10,000, making a cheaper EV like Nissan’s Leaf positively thrifty. Get people to buy EVs faster and you’ve made a big move.
Subsidies for new wind and solar electricity should be extended, too, even expanded. Closing every last coal plant should be a national goal — we can find other work for the 11,000 remaining coal miners .
A fast fracking ban would bring coal plants back, at least for a while. We’d buy more oil on world markets, empowering Saudi Arabia and its odious Crown Prince Mohammad Bin Salman. We may even tolerate more guff from Russia’s Vladimir Putin. The late Sen. John McCain taught us the difference between running a gas station, as Putin does, and running the superpower he thinks he does — there’s no point in making Putin correct.
By 2030 or 2035, natural gas should be obsolete for power production as wind plants get built. By 2035 to 2040, a cash-for-clunkers-like program can clear old gasoline-powered vehicles from roads. Clean electricity will assume most of the role gas plays in powering vehicles and heating homes now, assuming we upgrade electric grids.
That’s the way out — and with small enough lifestyle disruptions that America will buy it.