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With every passing day, the national economy seems to take a turn for the worse. Reports say that more Americans are in poverty than ever before, and the number of jobs may not return to prerecession levels until 2017.
Yet amid the bad news, there is an economic bright spot: One U.S. state is booming like never before. In North Dakota, the unemployment rate was an astoundingly low 3.3% in July; it hasn’t been that low at the national level since 1953. At a time when other states are facing declining revenues and budget deficits, North Dakota’s tax revenues are soaring, and it has a $1-billion surplus. In May, the state legislature passed a bill to reduce income tax rates for individuals.
Why the economic boom? Oil production, made possible by the combination of horizontal drilling and hydraulic fracturing, is unlocking vast supplies of energy from the state’s Bakken formation and putting North Dakota on an economic trajectory that is unmatched elsewhere in the country. In July, North Dakota’s oil production hit a new monthly high of more than 13 million barrels, which is twice as much as the state produced just two years ago.
“We shouldn’t allow fear to trump scientific evidence, especially when the economic benefits of a time-tested drilling technology can put thousands of Michiganders back to work.” –Mark Perry
Michigan could experience a similar economic boom by producing more of its own oil and natural gas. The Michigan Basin is believed to hold more than 282 million barrels of oil, 2 trillion cubic feet of natural gas, and 83 million barrels of natural gas liquids. These vast energy resources in Michigan are recoverable.
The key is an advanced drilling technology called hydraulic fracturing, or “fracking.” Well operators force water, sand and trace chemicals down a well bore to create tiny fissures in hard rock formations and coax the oil and natural gas upward through the well. Fracking has been used in more than a million U.S. wells since the 1940s.
But certain environmental groups are spreading fear and some misinformation about fracking to stop this successful technology. They claim the fluids used in fracking are dangerous and can contaminate well water, and advocate more federal oversight in the apparent belief that states lack the ability to monitor and regulate this technology.
These groups are wrong to exaggerate the environmental concerns about fracking. Lisa Jackson, the administrator of the U.S. Environmental Protection Agency, told Congress earlier this year that there is not a single recorded incident where fracking has destroyed a drinking water well.
Similarly, the Ground Water Protection Council has examined state laws governing fracking and questioned the need for additional federal legislation. In a 2009 study, the council reported that new federal regulations “would be costly to the states, duplicative of state regulation, and ultimately ineffective, because such regulations would be too far removed from field operations.”
The Michigan Department of Environmental Quality has examined the scare tactics about fracking. In a May statement, it notes that the agency “has not found any cases where hydraulic fracturing has caused adverse impacts to the environmental or public health in Michigan,” adding that the state’s “comprehensive” laws and regulations are working well, and that it actively will address large-scale fracking.
Still, the rhetoric of the fracking opponents continues unabated, causing some states and municipalities to enact moratoriums on fracking. We shouldn’t allow fear to trump scientific evidence, especially when the economic benefits of a time-tested drilling technology can put thousands of Michiganders back to work, generate millions of dollars in government revenues, and improve U.S. energy security.
Mark J. Perry is a visiting scholar at AEI
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