Interview: "The Frackers"

Prof Reynolds interviews WSJ reporter, Gregory Zuckerman, about his new book, "The Frackers".

Do watch the whole thing, but a couple things stood out to me.

First, the fracking revolution could have just as easily taken place in Russia, China, or a number of other places, but instead it happened in the US.  One reason for that is stronger property rights in the US than in other countries.  Most fracking in the US takes place om privately owned land.  In most states, the land owner also owns the mineral rights for his/her land.  That means they can make more money from allowing a fracking firm to drill on their land, which gives the land owner more incentive to do so.

It's a great example of how liberty leads to opportunity, which leads to prosperity.

Second, oil giants like ExxonMobil did not initiate the fracking boom.  Smaller firms, whose wells were drying up and didn't have the resources to explore abroad, were more willing to take risks because, essentially, they had nothing to lose.

Anti-fracking regulations "Liberals" demand wouldn't hurt ExxonMobil, but they would kill those smaller firms.

Unfortunately, no discussion on hydraulic fracturing is complete without addressing anti-fracking hysteria.  It's worth noting, then, that former DOE secretary Stephen Chu, no fan of fossil fuels, stated that fracking...

...is something you can do in a safe way,” former Secretary of Energy Steven Chu said while speaking in Columbus, Ohio, on Sept. 18. He also said that it was a “false choice” to say that the country can either preserve the environment or acquire cheap natural gas.

Former Secretary of the Interior, Ken Salazar, stated that...

“I would say to everybody that hydraulic fracking is safe,” Salazar said during a conference in Las Cruces, N.M. He said that fracking was “creating an energy revolution in the United States.”

Chu and Salazar joined current Secretary of Energy Ernest Moniz, who in early September praised fracking as “a big contributor to our carbon reduction” and “a huge economic benefit.” 

And now the British government has reached the same conclusion.

“There are risks but they can all be mitigated” through monitoring and regulation, Neil Dhot, a spokesman in London, said today by telephone. The report, compiled by an independent consultant, is funded by the water industry, he said.

Everything we do involves risk - even doing nothing.  An honest risk analysis of hydraulic fracturing, I believe, demonstrates that the financial benefits of fracking far outweigh the potential risks.

UPDATE: Speaking of fracking, the Bakken formation of North Dakota & Montana is projected to produce about one million barrels per day next year.

The growth of crude oil production in the Bakken region is part of a longer-term trend in drilling efficiency gains and has led North Dakota to rank second in crude oil production in the United States, behind only Texas.

UPDATE: Prof Reynolds has another outstanding column in USA Today in his series about "the America that works and the America that doesn't", which contrasts the successes of the frackers with the "train wreck" of Obamacare.

As I've written here before, there are two Americas: One that works, produces value, and overcomes problems, and one that for the most part doesn't work, consumes wealth, and produces more problems than it solves. 

The America that doesn't work was very much in evidence this past week, as the Obamacare roll out continued to be -- in Democratic Sen. Max Baucus' memorable phrase -- a "train wreck." Writing in The New Republic, John Judis observed that the Obamacare fiasco should make fans of activist government angry, because it will damage big government's brand for decades to come. Well, if you support big government because you think that politicians are more competent or honest than the rest of us, yes, it's a big bummer. Then again, if you really think so highly of politicians, you have more serious problems than that.

Read the whole thing.