Will the Natural Gas Boom Go Boom?

In 2003 five men in Rosharon Texas were engulfed in a fireball when their truck ignited fumes from the fracking waste they were disposing of. Two of them died immediately and a third died six weeks later.

How did this happen?

The site at Rosharon is what is known as a "Class 2" well. Such wells are subject to looser rules and less scrutiny than others designed for hazardous materials. Had the chemicals the workers were disposing of that day come from a factory or a refinery, it would have been illegal to pour them into that well. But regulatory concessions won by the energy industry over the last three decades made it legal to dump similar substances into the Rosharon site – as long as they came from drilling.

The workers thought they were disposing of "BS&W" (basic sediment and water), but fracking fluids contain benzene and other flammable hydrocarbons. The relaxed regulation on the disposal of waste water from fracking operations has resulted in these deaths, as well as the contamination of numerous aquifers, forests, farmland, rivers, streams and lakes. There have also been thousands of cases of intentional malfeasance:

More than 1,000 times in the three-year period examined, operators pumped waste into Class 2 wells at pressure levels they knew could fracture rock and lead to leaks. In at least 140 cases, companies injected waste illegally or without a permit.

My brother in law is an executive for a large energy company. Several years ago, when natural gas prices were upwards of $8 per thousand cubic feet, his company started construction on a huge facility in Louisiana to import liquefied natural gas (LNG).

Since then the fracking boom has hit the United States. The price of gas has plummeted to $2 or less. According to my brother in law, at this price the frackers are losing money even faster than they can drill gas. This was echoed by Rex Tillerson, head of Exxon, who said they're "losing their shirts" on gas. So my brother in law is converting his LNG import facility to also serve as an export facility. He smugly noted that no matter which way the gas flows, his facility is guaranteed to make billions.

Here's the problem: all these domestic gas drilling operations made large investments in fracking technology and leasing rights several years ago when prices where high. Now they've all gone and done exactly the same thing at the exactly same time, and they've produced a huge glut of gas. And they're losing money hand over fist.

Now they're whining that we have to pull their chestnuts out of the fire by loosening regulations and letting them dispose of fracking waste anywhere they want to. And even though they're losing money on the gas they're already extracting, they're still pushing to open more and more areas for fracking in Pennsylvania and New York and all around the country. Which will only make their own problem worse.

The accident in Rosharon occurred in 2003, when the price of natural gas was two and three times what is today. In the current price environment we simply cannot trust that these people are going to do the right thing by their workers, the environment and our children. Because they are losing so much money, they are going to take shortcuts in sealing wells and disposing of waste. For this reason alone, we need increased regulation and enforcement on fracking.

In economic terms, the all-powerful market has sent a price signal. Supply has exceeded demand and the price has collapsed. Production needs to slow down so that the price can go up, making it profitable enough to safely extract gas and dispose of waste by detoxifying rather than just pumping or dumping it. In other words, the all-powerful market needs to weed out the weaklings and let the strong survive. Yeah, we're going pay more for gas. But better to pay more today than let financially strapped operators cause earthquakes and taint our ground water with carcinogens for the next thousand years.

We should be extracting this energy over the next thirty years for domestic consumption instead of exhausting our reserves in the next five by madly rushing to export to China as much gas as possible today at the lowest possible price.

This country needs natural gas. It's a much better fuel than coal because it produces less CO2—because of gas CO2 emissions in the United States are at their lowest levels in 20 years. It is much more versatile than coal—it can generate electricity, power vehicles, heat homes and cook food. It's safer to extract than coal because you don't have miners thousands of feet below ground. But it's outright stupidity to extract and burn or export it all at once just because we can.

We have to stop thinking of energy resources as the property of individuals and corporations to do with what they will. We need a long-term plan for transitioning away from fossil fuels, which are finite and will be exhausted within our lifetimes. Short-term corporate profits should not be allowed to endanger the long-term energy security of the United States.

Farmers often come under criticism for creating their own crises: when the weather is good, they all produce the same crops and the price collapses. They are characterized as whining for price supports, but the fact is that in bad years—like this year—they can lose everything.

Energy companies are doing the same thing now with gas, but they don't have the excuse of weather. They are creating a gas boom which is going to explode like that truck in Rosharon.