OLR Report 2013-R-0176 provides information on hydraulic fracturing, including (1) how it lowers natural gas prices, (2) how it affects the nation's energy independence, (3) which states have benefitted from the practice, and (4) the environmental concerns.
Over the past several years, hydraulic fracturing (“fracking”) and horizontal drilling have greatly increased domestic natural gas and oil production by allowing wells to reach previously inaccessible natural resources. Domestic natural gas production has increased 19% since 2007, leading to a roughly 50% decline in gas prices. This increased gas and oil production has also led some to predict that the nation could achieve “energy independence” sometime in the next decade, although others argue that such predictions are overly optimistic.
How individual states have benefited from fracking depends largely on the amount of shale gas or oil in the state, the proliferation of the new techniques, and the state's tax and regulatory system. According to a study funded by the American Petroleum Institute, Texas, which contains the oil producing Barnett shale formation, collected over $10 billion in state and local tax revenue from unconventional (fracking related) oil and gas activity in 2012. Pennsylvania, which contains portions of the gas producing Marcellus shale basin, collected over $1.2 billion in similar state and local tax revenue last year.
Alongside its apparent benefits, fracking has raised several environmental concerns, particularly related to water contamination and usage. The U.S. Environmental Protection Agency (EPA) and several states are currently studying the practice's implications.
For more information, read the full report.
