Alpine Energy Services

Daniel Yergin writes in the WSJ, hydraulic fracturing and horizontal drilling—together known as fracking—came to public attention two decades ago. The US was then the world’s largest importer of oil. Today it is energy-independent with more than 70% of its oil and more than 80% of its natural gas produced through fracking. The process has become essential to the nation’s energy supply and can’t be eliminated. In the process, America has achieved energy independence on a net basis. US output is closing in on 13.5 MMBpd, exceeding that of both Saudi Arabia and Russia. Add NGLs, and the US produces around 20 MMBpd. Despite this progress, many continue to underestimate how transformative shale oil has been for the US economy and the American way of life. For example, if fracking were banned, the US would need to import extraordinary amounts of oil to fuel our gasoline- and diesel-powered cars. In 2008, before shale-oil production began in earnest, the net bill for importing petroleum was $388B—more than 40% of the total merchandise trade deficit. Today the same bill, by contrast, is virtually nothing. There would be other costs to a phase-out of fracking. If the US were to start importing again, the price of oil would doubtless rise, as we would be forced to compete for supplies with countries such as China, which is estimated to import more than 70% of its petroleum. The US also exports a large amount of LNG, mostly produced from shale. Without it, LNG’s positive effect on the trade balance would disappear too. In previous decades, upheavals as Ukraine’s war against Russia and Israel’s war with Iranian proxies would have spiked global prices. In recent years the scale of US production has helped offset any such surges. This stabilizing effect would become even more crucial if an expanding Mideast war targeted major regional oil facilities, threatening to drive prices up further still. Shale influences more than America’s prices or balances of payments—it also enhances our geopolitical strength. One of Putin’s several miscalculations in invading Ukraine was that he could use energy to shatter the European coalition supporting Kyiv. His strategy failed because large supplies of LNG—bolstered by increased exports from Norway—compensated for the loss of Russian gas. Nearly half of the EU’s LNG supply in 2023 consisted of US-sourced LNG, mostly processed from shale gas, making the US its largest supplier. Were that supply to be constrained, our allies’ security would be severely compromised and a significant feature of the NATO’s arsenal eliminated. To Sum It Up: A ban on fracking would be both misguided and destructive for the US and its allies. Recurrent out-of-touch debates on the topic need to be tabled considering a central fact—shale has become crucial to the US economy and global energy security. It’s here to stay. #energy #energytransition

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