The Arithmetic of Shale Gas

On May 11, 2012, The New York Times published an editorial on making natural gas extraction technology “safer” for the neighbors and landowners where new wells are being drilled. The first sentence said that “There is little doubt that the (new shale) gas is plentiful and cleaner than coal (and) could help with the country’s energy and climate problems” but the Times went on to deny this economic gain...”unless the public can be sure that it will not pollute water supplies or the air.” This approach to new technology is in the tradition of cost-benefit analysis (“CBA”) as required for all Federal regulation that certifies beneficial gains to the economy. When justifying acceptance of new energy technology, then in most cases, the findings are that benefits are substantially in excess of the cost, indeed by as much as is required to compensate those on whom the costs are imposed. The New York Times however dispenses with assessment of benefits. There is no mention of gains to industry from lower-cost fuel and raw material supplies, of gains to home consumers from lower monthly heating, air conditioning and power costs as new shale gas expands supplies lowering prices delivered through the national large-scale pipeline network. Instead the Times focuses on contamination of groundwater, failures in the disposal of contaminated water used in the drilling process, failures to deal with the chemicals used in the drilling process, and last but not least on air pollution from escaping methane (i.e. the natural gas itself). The orders of magnitude of these costs to the economy are not estimated nor are they compared to benefits. There are methods proposed for reducing costs, such as preventing any drilling