There is no doubt that the growth in U.S. oil and natural gas production has been the result of the efficiency achieved in production areas through the technique known as hydraulic fracturing (HF), or fracking, in shale rock containing gas and oil.
The benefits for the United States in general have been significant: from new jobs and higher tax revenues to lower energy costs and lower greenhouse gas emissions. But some presidential candidates have committed, as part of their campaign “pledge”, to banning the very technology that has made this boom possible: hydraulic fracturing (HF), or fracking.
We all know that campaign promises are very rarely fulfilled in full. These promises are based on an extreme interpretation of environmental protection that is not supported by shared scientific studies. But worse still, they are based on a mistaken interpretation of what voters want in terms of general welfare and of what objectives can really be achieved by banning fracking.
Since the consequences of fulfilling the electoral promise could cause more harm than the good to be protected, this raises an important question: what would happen to jobs and the economy if hydraulic fracturing were banned?
The Global Energy Institute has produced a report that reaches dramatic conclusions. Indeed, a ban on fracking in the United States would be catastrophic for its economy. If such a ban were imposed following the 2020 elections, between 2021 and 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product (GDP) by $7.1 trillion.
Tax revenues at the local, state and federal levels would decrease by a combined total of almost $1.9 trillion. This would require spending cuts due to a shortage of funds for schools, hospitals, infrastructure and other critical public services. Energy prices would also rise and imports would resume, returning to bygone times of dependence on oil-producing countries.
Natural gas prices would rise by 324%, causing household energy bills to quadruple. By 2025, motorists would pay twice as much for gasoline at the pump and the price of oil would reach 130 dollars per barrel.
For countries like Argentina, if the plans of YPF’s current president were to materialize, what would be a debacle in the United States would become a unique and historic opportunity for Argentina. Such are the paradoxes of success.
