How Fracking saved America from Europe’s Fate and Improved Energy Security for Both

By Dr. Paul Sullivan, Guest Contributor

Guest contributor Dr. Paul Sullivan teaches about energy and environmental security at Johns Hopkins and is a senior non-resident fellow in the Global Energy Center at The Atlantic Council. His obtained his Ph.D. from Yale. He was in MIT's Seminar XXI class of 2006.

I am a practical environmentalist who considers other goals, like national security, international security, and energy security. I focus on these three given my decades working on energy and environment issues that started at the Oak Ridge National Laboratory in the 1980s and due to my over 22 years of teaching senior officers from the US and many foreign countries at the National Defense University. I have worked in some hard labor jobs in the past and try to see the world as it is, not as I would like it to be.

My family and I live in the environment. We eat food and drink water from the environment. We breathe the air. Therefore, I am an environmentalist. There are lots of tradeoffs in this world. We need to be practical and thoughtful. Focusing on one goal is not the way to go. Some of what I write may irritate and anger both environmentalists and energy people and even the national and international defense people. But my purpose here is not to comfort people into complacency with their views, but to challenge people.

Those who wanted to ban fracking were wrong and continue to be wrong. Russia’s war in Ukraine is having a profound effect on the markets, and it should make their wrongful thinking more clear. However, I am pretty sure some of them won’t get it, and others don’t want to get it. Yet this is one of the worst times to try to ban fracking. Our energy, economy, and national security are at risk if we do.

 LNG exported from the United States to support the European Union is only made possible due to the coupling of hydraulic fracturing and horizontal drilling technologies that unlocked previously stranded natural gas molecules in tight gas reservoirs. Many in the EU might want to send a letter of thanks to US frackers. But that’s likely asking too much.

Yes, I understand how the imbalances of CO2 and other emissions have caused damage to our environment and climate. I teach about environmental security at Johns Hopkins. I get it; I am worried about it; we are heading into real trouble if we neglect that problem. However, along the way to the inevitable and needed energy transitions, we need to ensure energy and national security for ourselves before we can help our friends, partners, and allies. And if we can help our allies and friends, we should.

America’s Energy Impact Upon the European Union

Oil markets have long been global; increasingly, natural gas markets are too. What happens in one area of the world can affect many other areas of the world.

The EU relies on Russian imports of natural gas for about 40% of its natural gas imports, and it relies on Russian oil for about 28% of its imported oil. Some EU countries like the Balkan states of Austria, Estonia, Bulgaria, and Finland depend on Russia for anywhere between 50% and 100% of their natural gas. Overall, the EU is 97% dependent on oil imports and about 84% dependent on natural gas imports.

The EU’s reliance upon Russia, and others, continue to increase as their oil and gas production declines, too. This has directly affected their energy security and geopolitics. They are much less energy secure overall than we are in the United States.

United States natural gas import dependency, the percentage of imports compared to consumption, dropped from 19.4% in 2006 to 8.5% in 2020. Our oil import dependency dropped from 66% in 2006 to 43% in 2020. By comparison, the EU’s oil dependency ratio grew from 94% in 2006 to close to 96.5% recently. The EU’s natural gas dependency grew from 71% in 2006 to 84% recently.

One of the main differences between the two? There is a one-word answer: fracking.

Friend or Foe

Another big difference in energy security between the United States and the European Union is that we get most of our oil and gas imports from friendly neighbors like Canada and Mexico. Recent data shows that over 62% of our oil imports have been from Canada and Mexico, with Canada providing the majority, while our most prominent sources of imported natural gas recently have been Canada, Trinidad, and Mexico. So America is simply less dependent on oil and gas imports than before fracking. I need to reword that for emphasis  – America is more energy secure today because of fracking. Meanwhile, the EU’s largest source of oil and gas imports is an unfriendly and vengeful Russia. And they have left their shale and tight oil and gas in the ground.

Many people wanted to stop the shale revolution. We would be in a terrible energy security situation if that happened. Shale oil and shale gas now account for about 70% of our domestic oil and gas production. It will likely remain at that percentage or higher for years to come. 

Now imagine harming that energy security by stopping fracking or injecting regulatory uncertainty for the shale oil and gas industry. Our economy would be shattered. Inflation would be much worse than today; many people would lose their jobs, the dollar would be weaker, and our trade deficit would explode. We could be more reliant upon adversarial countries for our energy imports.

If you think oil prices are bad domestically, imagine paying the equivalent of $500 per barrel for natural gas that the Europeans were paying recently. What is happening here is mild compared to what is happening there.

Natural gas, oil, and gasoline prices in America are considerably lower than in the EU. Instead of paying under $4 per gallon, on average, across most of the US, imagine paying well over $10.80 a gallon in Norway, $9.20 a gallon in Sweden, or $8.80 a gallon as they are paying in Germany. These were the prices being paid as of the 7th of March. They could go up more.

One of the differences in gasoline prices between the US and the EU is from taxes. They pay much higher gas taxes. But a lot can be explained by the EU’s oil import dependency and the neglect of its domestic oil and natural gas resources. Tight oil and tight gas reservoirs exist in the EU, but they mostly refuse to develop their domestic resources. So, they suffer more from the energy claws of the bear.

American natural gas prices have been about 1/6th that of the EU, on average.. At one point last December, EU natural gas prices were 12 times ours on average. All thanks to shale oil and gas.

Lessons from History

In the 1960s, John F. Kennedy warned Europe not to tie their energy security to adversarial Russia. Unfortunately, Europe did the opposite. In the 2000s, the EU further increased its dependence on Russia. Their myopia and inability to make some of the tough energy-security-environment tradeoffs got them into this situation.

The world should learn from the ongoing situation in the EU that tradeoffs among energy security, national security, and environmental security can change – and sometimes overnight. In the short term, we need to preserve energy, national security, and international security at some cost to environmental security. In the medium term and long term, we can focus more on environmental security while preserving energy, national security, and international security. There are multiple goals to consider.

Shale oil and gas saved us from a much worse energy fate. It has helped reduce what would undoubtedly be far higher inflation than we are already experiencing.

Shale has also helped the EU during some of the worst energy shocks in its history recently. Think about what situation Europe, and the United States, would be in if we didn’t have the benefits of shale oil and gas. The shale industry survived the price wars when OPEC tried to kill its growing global influence twice during the 2010s. There have been a few moments in recent history that this industry has almost been wiped out at the hands of domestic policies, too.

We should be thanking the oil and natural gas industry for their sacrifices and the more than 100 companies that were forced into bankruptcy, totaling more than $600 billion. Instead, part of our society remains antagonistic towards the shale oil and gas industry. This must stop if we want to avoid a similar fate to that of the European Union.

The same people who were wrong about fracking are now asking shale oil and gas producers to increase production while some Senators call for taxing their profits. They were wrong then, and they are wrong now. This is the time to incentivize the oil and gas industry, not stifle it.

Now, we must create regulatory and societal support to maintain our energy security, environmental security, national security, and international security for the betterment of the United States and the betterment of the world. If I got some of you irritated and angry with some of what I said… good. Then I got some of you thinking.

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