Fracking Safe For Now, Clean Bill of Health Still Pending
http://www.glgroup.com/News/Fracking-Safe-For-Now-Clean-Bill-of-Health-Still-Pending-46072.html
Fracking Safe For Now, Clean Bill of Health Still Pending
Friday, January 22, 2010
* Analysis by: GLG Expert Contributor
* Analysis of: Analysts says frac rules unlikely
* Published at: www.upstreamonline.com
Summary:
A bad economy and the unfavorable political environment for Democrats put the Exxon XTO merger and fracking as a whole out of reach this year. As the economy improves, and if local bad press coverage of water problems near fracking sites continues (regardless of whether fracking is to blame) could lead emboldened Democrats to act, most likely to force companies to reveal to regulators (if not the public) the chemical content of the hydraulics they use. Potential action is at least a year away.
Analysis:
The House Energy Committee hearing this week went well for ExxonMobil, XTO, and fracking overall. Given the state of the economy and a fairly successful messaging campaign portraying climate change legislation as a job killer, Democrats realize that it would be dangerous to their careers to appear to be more concerned with the environment than the economy this year.
Fracking produces relatively clean domestically produced energy, two qualities that give it a leg up among politicians of all stripes. With these political considerations, the merger and fracking are both safe for the moment.
Fracking is not in the clear yet, however. Election year politics will make action difficult for opponents, and the stand alone bills introduced this summer are unlikely to move. There will be a jobs bill in the Senate this spring with some energy titles in it, and it’s possible but unlikely that some of anti-fracking language will find its way in.
The real threat comes in the medium to long term. As the economy starts to improve over the next 18-24 months, Democrats will become further emboldened. In the meantime, the EPA should complete it’s next look at shale fracking and drinking water. Anything less than a 100% safety finding leaves the door open for Congressional action.
If local news stories about brown water flowing from taps and gas leaking into basements continue (whether fracking is to blame or not), retail politics could lead to Congressional action. With Chuck Schumer (co-sponsor of the Senate anti-fracking bill) ascendant in the Democratic party, continued bad press in upstate New York, rural Pennsylvania, and Texas could spell trouble for the industry.