A ban on hydraulic fracturing (fracking), which some Democratic presidential candidates have pledged to implement, would be “catastrophic” for the U.S. economy, according to a new report by the Global Energy Institute, a think tank backed by the U.S. Chamber of Commerce.
“Our analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. gross domestic product (GDP) by $7.1 trillion,” researchers said.
Texas alone would lose more than three million jobs. Tax revenue at the local, state and federal levels, meanwhile, would decline by almost $1.9 trillion total by 2025.
“Natural gas prices would leap by 324%, causing household energy bills to more than quadruple,” according to the report. “By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130/bbl.”
The report was done by the Global Energy Institute (GEI), which teamed up with FTI Consulting to conduct the analysis using the impact analysis for planning model, “a well known and widely used input-output model that tracks monetary transactions within the economy between different industries, the government and households.”
The economic impacts refer to a scenario in which fracking is banned outright on federal and private land, which is unlikely at least in the short-term, GEI President Marty Durbin said Thursday during a conference call with reporters.
“Could a president on Day One ban fracking everywhere? No, but let’s not look past the fact that any president can take many other actions that would seriously restrict oil and natural gas development,” Durbin said, citing a drilling ban on federal lands as an example of one of those actions.
“I want to take the candidates at their word,” he continued. “Some of the candidates are literally saying, ‘I will ban fracking everywhere.’ So let’s be clear [on] what the impact would be.”
Energy analytics firm Kayrros said Thursday publicly available data “show that most fracking on federal lands is occurring in a specific subsection of the Permian Basin: the New Mexico side of the Delaware sub-basin.”
The GEI analysis found that an outright fracking ban would cost New Mexico 142,000 jobs and $8 billion of state and local tax revenue by 2025.
Durbin said that the GEI is updating a 2016 report on the impact of a fracking ban on federal lands only.
At the state level, there is considerably more acceptance of fracking than at the national level, where several Democrats are jockeying for the presidential nomination.
Durbin said, “we think some of the most important voices in this debate are states that have proven track records of economic growth with Democratic leaders,” citing New Mexico Gov. Michelle Lujan Grisham as an example.
“Led by Gov. Grisham, a Democrat, New Mexico’s leaders have embraced oil and gas production as a big part of their path toward economic prosperity,” he said.
Pennsylvania, which also has a Democrat governor, would lose 609,000 jobs and $261 billion of gross domestic product by 2025 under a fracking ban, the report found.
“Banning the safe and strongly regulated use of hydraulic fracturing would bring our economy to a painful standstill,” Marcellus Shale Coalition David Spigelmyer told NGI’s Shale Daily. “It would crush hundreds of thousands of good-paying jobs, including in manufacturing, and wipe out billions of dollars of capital investment in Pennsylvania while reversing the environmental progress made from natural gas.”
Added Durbin, “For some of the states in our report, our message may be preaching to the choir. But my message for them is that it’s time for the choir to sing louder. Candidates for national office must understand that this policy would harm the voters that they will need.”
Sens. Elizabeth Warren of Massachusetts and Bernie Sanders (I-VT) have pledged to ban fracking immediately after taking office, while other candidates’ stances are more nuanced.
Although fracking was not mentioned directly in Thursday night’s Democratic presidential debate, candidates framed the oil and gas industry’s goals as being at odds with the fight against climate change.
Asked whether he would sacrifice oil and gas production growth and jobs to address the climate crisis, former Vice President Joe Biden said, “The answer is yes, because the opportunity for those workers to transition to high paying jobs…is real.”
Warren said “the biggest climate problem we face is the politicians in Washington who keep saying the right thing but continue to take money from the oil industry, continue to bow down to the lobbyists, to the lawyers, to the think tanks, to the bought-and-paid-for experts.”
Billionaire businessman Tom Steyer meanwhile, boasted that he has “taken on oil companies and beaten them on environmental laws,” adding, “I’ve prevented pipelines and I’ve prevented fossil fuel plants.”