Guest Editorial: America’s Unconventional Energy Opportunity

Abstract

Guest Editorial The United States is in the midst of a once-in-a-generation energy opportunity. The advent of hydraulic fracturing has launched a new era of energy abundance—a stark contrast to the decades of growing domestic energy scarcity that preceded it. This abundance has contributed to a sharp reduction in oil prices during the past year. Moreover, US natural gas prices have remained well below the global average and are one-third the level of those of many of its largest trading partners. Yet the general public shows little appreciation for, or even an understanding of, the relationships between “fracking” and increased domestic production and lower fuel costs.* A recent Pew Research Center study found that more Americans oppose hydraulic fracturing than support it, and the opposition is growing. In many parts of the country, fracturing has become a derisive term for all drilling activity. The energy industry is losing the battle for public and political legitimacy. Eroding public support poses a threat to the ongoing progress of the industry and the US in boosting energy output, and it threatens to curtail the economic and environmental benefits of future energy production. However, our recent report, “America’s Unconventional Energy Opportunity” by Harvard Business School (HBS) and The Boston Consulting Group (BCG), shows that a rational middle does exist (Porter et al. 2015). We found that it is possible to safeguard the economic benefits of unconventional oil production while simultaneously improving environmental performance and accelerating the transition to a lower-carbon energy future. Divisive Debate Opposition to unconventional production has already worked its way into public policy in many parts of the country. In late 2014, Gov. Andrew Cuomo of New York banned hydraulic fracturing in the state after health officials in his administration decided on the basis of limited evidence that regardless of how drilling procedures are regulated, fracturing poses a threat to air quality, clean water, and public health. At about the same time, the citizens of Denton, Texas, which is located just a few miles from where hydraulic fracturing was perfected, passed a ballot initiative that would ban hydraulic fracturing within the city’s limits. (The ban has since been overturned by the Texas Legislature, which gave the state government exclusive jurisdiction over the oil and gas industry.)