Back during the dark days of the late-1970s, when America was being held hostage by Middle East oil interests, the Department of Energy was created, ostensibly to free our economy from the dependence on foreign oil and all that trappings that go with it. It was a noble goal – the American economy could grow without the risks posed by foreign governments. Thirty five years later, could we finally be reaching that goal?
Interesting the often criticized billions of energy company subsidies of the Bush era do not appear to be responsible for solving the issue. Nor are the prior efforts to subsidize or otherwise encourage investments before. The energy subsides since 2000 do not appear to be the reason, but the arctic wilderness did not need to be disturbed either. The success had nothing to do with any of it, but instead a series of private risk takers to a gamble on an unproven technology, to make great strides – fracking.
Based on the success of the development of fracking for natural gas, we have made major improvements. But it is not just fracking, as many power plants are or have been rehabilitated to convert away from oil and coal to cleaner burning natural gas, thereby developing the market for natural gas. Local governments have been migrating their fleets to natural gas for years – natural gas can use the same engine with an $8000 conversion kit that allows automobiles to run on both. The conversions have made the demand for natural gas greater, making the investments needed to frack, more profitable. The US has significant reserves of natural gas, and fracking has made it easier to capture this resource. The benefit of natural gas is that the demand for oil is down, creating a glut of oil on the market and a decrease in price (at least for now).
But the question that has been left unanswered is what the domino effect of natural gas is. Certain advertisements will argue there is 200 years of natural gas available for the US so we don’t need to worry about energy. Others will argue that only 10-15% of that supply is actually recoverable (it should be noted that this assumes current methods), which is a far shorter horizon. But in either case, natural gas in the ground is not a renewable resource so the question must be asked – does the fracking boom interfere with investment in truly renewable resources?
Since 2000, Washington has invested heavily in renewable resources – wind, solar and to an extent waves. Some energy companies like NextEra have been investing heavily in wind and solar power (they are the biggest investors in renewable power in the US), so what of these truly renewable investments? Will the rush to frack turn resources away from truly renewables? Or will renewable continue to be a small fraction of energy demands for the near future? The question remains unanswered for now.
The bigger question for utilities is whether fracking will divert money away from plans for renewable efforts like digester gas capture, solar cells and wind power at reservoirs and the like that utilities are using to help reduce power purchases. Will it impact utility efforts to become self-sufficient energy consumers like East Bay MUD? You see the economy has few favorites. Government can create favorites, by subsidizing products that would otherwise be too expensive like PV panels. The benefit of subsides can be to reduce costs of emerging technologies that may never otherwise see widespread use. Subsidizing renewables fit this mode.
Utilities should be concerned that the rush to frack pulls money away from their plans for renewable power. As the feds look to reduce their contributions to water and wastewater infrastructure, public money to energy does not appear to be decreasing. And unlike publically owned water and sewer systems, private investment in energy is increasingly available as a result of the potential profits that can be made. The diversion of funds may decrease prospects for funding water and sewer utility options, especially if interest rates begin to rise. The Federal Reserve Bank’s concern about rising interest rates was manifested earlier this year when interest rate increased, housing sales decreased immediately.
Of course the issue of fracking goes beyond the potential to disrupt monies for renewable energy. There are questions about the practice of fracking include water quality impacts, causing earthquakes, land subsidence, etc., issue that have yet to be resolved. Keep an eye out for a risk assessment that AWWA and others will be involved with to look at these risks.