By Manish Vaid and Tridivesh Singh Maini*
The utilization of natural resources has generated numerous debates between environmentalists. Shale gas is one such resource, which on one hand has transformed the energy landscape of the United States, while on the other, it has created a huge fuss amongst the environmentalists, due to the extraction process called as “fracking” (or hydraulic fracturing).
This technique of extracting gas from the rocks has also gained traction in the Presidential debates. Amongst the three leading candidates, namely, Donald Trump, Bernie Sanders and Hillary Clinton, the fracking issue is been looked at from three different perspectives. While the Republican front-runner Donald Trump is in favour of fracking, Democratic presidential candidate Sanders is against it. Another Democratic candidates Hillary finds herself in between the two, allowing fracking but with some conditions only.
Shale gas which is regarded as an “unconventional” gas resource refers to the gas produced from fine-grained gas-prone sedimentary rocks through fracking. In fracking, drilling companies inject a mix of water and chemicals into wells to fracture the shale formation, using advanced extraction technologies such as horizontal drilling which allows production of gas from reservoirs. Such a boom started when the conventional production of natural gas was declining. It is for this reason, that shale gas revolution in the U.S. is regarded as one of the key developments in today’s energy markets. This has shaped its economy positively, providing economic benefits across the nation, which in the past century was depending heavily on fossil fuel resources from countries like Saudi Arabia, Kuwait and the United Arab Emirates, to the degree that it impacted its foreign policy choices.
But this dependence on imported fossil fuels has had numerous economic, political, military, social and other ramifications. Therefore, every president since Richard Nixon has promoted some form of ‘energy independence’ for the U.S., through different route such as such as increased conservation, greater reliance on U.S. own natural resources, and / or more aggressive development of alternative and renewable resources.
In the run-up to the U.S. Presidential Elections 2016, energy has once again stolen the limelight as it is the lifeline of the U.S. economy, having far reaching consequences, domestically as well as abroad. Much of the debates on energy for this election has centered on the Keystone XL Pipeline (that would transport oil from Canada to the Texas Gulf Coast) and fracking, which is seen as an environmental threat to the U.S.
While Keystone XL pipeline seems to have met a dead-end after the Obama administration has blocked this pipeline to move ahead, citing climate change concerns and Trans-Canada initiated arbitration under North American Free Trade Agreement against the U.S., the current election campaign debates for fracking have so far received mixed positions.
Notably, recent times have also witnessed a historic fall in global crude oil prices, all of which has impacted the economies of both energy producers and consumers. For the U.S. for instance, fall in the global oil prices has hit its shale oil and gas producing companies most, as shale gas production fell significantly ever since the mid-June 2014 oil price crash. The profit margins of these companies have been squeezed as a result of low oil prices.
With OPEC refusing to curb its oil production and flooding the global market with cheap oil, the oil price have further scaled down to below $28 a barrel by January 18, 2016, threatening the U.S. shale gas industry. Though some companies like Rival Whiting Petroleum Corp are ready to come back if oil reaches $40-$45 a barrel, which suggests a possible revival of shale business, with some new innovative shale fracking techniques, to boost the production and keeping the cost in check.
Therefore as aforementioned, the shale gas industry which has shaped up the U.S. economy positively seems to have regained the lost ground and is keeping the fracking debate alive amongst the Presidential Candidates irrespective of party lines – Democrats and Republicans. The mention of the position of two important candidates from the Democrats, namely, Hillary Clinton and Bernie Sanders, on the future of shale gas in the U.S. energy landscape are important.
While Clinton has advocated for phasing out of fracking on public lands, using natural gas as a bridge fuel for the U.S. energy transition to renewable energy, Sanders wants a complete ban, citing environmental concerns.
Knowing the relevance of the shale gas boom, which helped in making the U.S. a natural gas exporter from an importer, Clinton, instead of imposing a complete ban on fracking, laid down three conditions, one of the important one included the reversal of ‘Halliburton Loophole’, which became popular ever since the U.S. Congress enacted legislation to deal with fracking operation. This legislation became the Energy Policy Act of 2005, which exempted natural gas drilling from the Safe Drinking Water Act, while letting off companies from disclosing the chemicals used during fracking. However, last year Obama administration initiated to regulate fracking by making it compulsory to disclose the chemical make-up of fracking fluids, to which many shale companies are not happy.
The other two conditions which Clinton has listed were the limiting of drill wells’ emissions of methane and giving local and state authorities the option to force out drilling companies. Her advocacy for shale gas business, albeit with certain conditions, was to corner coal miners and companies, primarily to show her concerns to the climate.
Sanders, on the other hand has taken a more aggressive stand on energy efficiency and sustainable energy, through the larger usage of clean energy such as wind and solar. With such a goal he was seen on the same page as with that of the environmentalist and the common folk, who were extremely upset not with the emissions generated from the fracking of the shale but with the of groundwater pollution.
His clean energy target sought to reduce carbon emissions by 40 per cent by 2030 and more than 80 per cent by 2050, by imposition of carbon tax, repealing fossil fuel subsidies and bringing massive investments in clean energy source such as solar and wind. He also went ahead to put a moratorium on nuclear power plant license renewals in the U.S., which shown his clear strategy to put the U.S. on to clean energy path.
So given stands on futuristic energy policy goals of the U.S., Clinton seems to be more pragmatic, as banning world’s largest shale gas industry, which managed to hold its position even during the low oil price regime and brought natural gas revolution in the U.S. could risks its energy dependence towards the Gulf. Such an attempt would also be a dampener to other countries, such as China and India which have, with the help of the U.S. support, started to get inclined to shale gas, considering natural gas as a bridge fuel towards renewable energy.
While no politician can afford to ignore environmental issues, both Sanders and Clinton will realize that ‘fracking’ is important not just for meeting US’ energy interests, but its foreign policy as well.
*Manish Vaid is a Junior Fellow with the Observer Research Foundation having research interest in the energy policies and geopolitics.Tridivesh Singh Maini is a Senior Research Associate with The Jindal School of International Affairs, OP Jindal Global University, Sonipat. They can be reached at: [email protected]