By Brenda Shaffer
Vice President Kamala Harris’s shifting statements on fracking have become a key issue in the current US presidential election campaign. Just five years ago, Harris pledged to ban fracking, the drilling technique that has helped make the U.S. the world’s top producer of oil and natural gas. Today, the Democratic nominee said he supports fracking, with many political analysts considering the shift in political importance to winning Pennsylvania’s electoral votes. Pennsylvania is the main center of US natural production through fracking.
However, the issue goes well beyond Pennsylvania; it also has far-reaching implications for the US economy and the energy security of the US and its allies. In addition, fracking can also be restricted indirectly, without official restrictions. Indeed, the Biden-Harris administration has limited fracking in indirect ways, such as a special tax on natural gas production and an end to liquefied natural gas (LNG) exports. So, the question for Vice President Harris is not, are you going to stop fracking, but are you going to continue the policies of the Biden-Harris administration that stifle natural gas production and make production more expensive.
Of course, the question of whether Harris will follow through on his 2019 commitment to “ban fracking” is relevant in Pennsylvania, considered the most important battleground state and home to 20% of US natural gas output. Fracking provides more than 100,000 jobs for Pennsylvanians and generates more than forty billion dollars in state revenue. No doubt Harris’s views on fracking will affect the prospects for the election in the Keystone State.
However, restrictions on natural gas production through fracking, also affect all Americans. A significant increase in the production of natural gas since the early 2000s enabled by fracking, has helped greatly lower the cost of electricity and heat in the US. This has given America an important competitive advantage in manufacturing, persuading many companies to move to the US from Europe and other places where energy costs are higher.
Fracking has turned the U.S. into a net exporter of natural gas, which generates revenue and creates jobs. The emergence of the US as the top producer of natural gas and the top global exporter of LNG has also brought significant geopolitical ramifications, allowing the US to guarantee reliable gas supplies to its allies and make gas accessible to developing countries to replace coal, such as Pakistan. Europe could experience some cold weather after Russian gas supplies dwindled following the invasion of Ukraine, thanks to a surge in US LNG exports.
As part of the climate agenda, the Biden-Harris administration imposed extensive restrictions on US natural gas production, but did not explicitly ban fracking. These measures raise costs and thereby reduce the investment attractiveness of US natural gas production. As part of the restrictions on natural gas, the Biden-Harris administration implemented a “methane” tax (methane is the main component in natural gas) as part of the Inflation Reduction Act of 2022, the administration’s feature climate legislation. In addition, the administration implemented several new regulations on methane, which added several layers of bureaucracy to natural gas production, which increased costs and caused production delays.
To reach young voters with increasing climate credentials, in January the Biden-Harris administration suspended new permits for LNG exports to countries that do not have a free trade agreement with the US, and thus require the approval of the federal government. In July, a federal court overturned the ban, but no new permits have been issued since then. Almost counterintuitively, the ban on LNG exports can lead to long-term price increases in the American natural gas market, because without new exports as an anchor for demand, some investors are likely to save and production can decrease in the US.
Additionally, the Biden-Harris LNG export ban raises the question of whether the US can be considered a reliable supplier; in the wake of several potential customer countries signed new import agreements with Qatar and Oman. Even if the ban is lifted in the future, the decision has shaken the international gas market, as importers know that changes in the US administration or policy could endanger energy supplies.
Low natural gas prices are critical to lowering inflation and maintaining America’s manufacturing edge. natural gas prices feed into the cost of almost all products, since natural gas is the main source of electricity in the US A rise in the cost of power, translating into a rise in the cost of manufactured goods. In addition, natural gas is a feedstock for fertilizer, so the price of natural gas increases, leading to higher food costs.
So, the real question to ask Vice President Harris is whether he will continue the Biden-Harris policies and taxes that affect natural gas production and exports. It’s important for the United States, and not just Pennsylvania. It is relevant not only for jobs in Pennsylvania, but the trajectory of inflation and the American economy.
Prof. Brenda Shaffer is a faculty member of the US Naval Postgraduate School, Senior Advisor for Energy at the Foundation for Defense of Democracies, and Senior Fellow at the Atlantic Council’s Global Energy Center.
This article was originally published by RealClearEnergy and is available via RealClearWire.
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