12:00 AM, Jan 25, 2014 • By IRWIN M. STELZER
These uncertainties notwithstanding, even a sober view of fracking is that it will provide the world with plenty of energy in years to come. For now, one thing is certain. Rising oil and natural gas production in the United States is laying the basis for more rapid economic growth as we compete for investment with countries with sky-high energy costs. The EU bureaucracy last week affirmed its love of costly wind machines and solar panels, but industry loves low-cost energy. Energy-intensive industries are moving to America to get access to it, especially since it is found in states with laws unfavorable to trade union organization. Low energy costs and the possibility of a work force responsive to management rather than union organizers is a combination difficult to beat.
It is too early to shout “manufacturing Renaissance” in the U.S., although the National Association of Manufacturers is predicting that low-cost natural gas -- about one-fourth of the cost in Europe -- will result in one million new manufacturing jobs in the U.S. by 2025. Many will be filched from anti-fracking Europe. Austrian steel maker Voestalpine is spending over $700 million to build a new plant in Texas; German chemicals giant BASF is spending $5.7 billion on plants that in prior years would likely have been built in Europe. South America, too, will feel the competitive pressure: Canada’s Methanex Corp. is laying out $425 million to dismantle a methanol plant in Chile and move it to the U.S.
The danger here is that politics might trump economics. Yoko Ono, Lady Gaga, and Sir Paul McCartney are leading a thus-far successful lobbying effort to stop fracking in long-depressed upstate New York, where several celebrities have homes and most inhabitants need jobs. They argue that fracking threatens the area’s water supply. Governor Andrew Cuomo is stalling on granting drilling permits lest he antagonize the stars and their publicity machine. Other threats to fracking include the anti-fossil-fuel crowd that fears an increase in carbon emissions, never mind that fracked natural gas is displacing much more carbon-intensive coal, driving U.S. emissions steadily down.
In the end, policy and prices will determine the extent of the fracking revolution. So far, if I might be permitted a pun, the industry has a green light to proceed with drilling.
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