What would it really cost to protect our health, clean air, and clean water from the contamination caused by oil and gas production?

In recent months, several publications have purported to calculate the costs of NRDC proposals to protect human health, clean air and clean water from contamination generated by oil and gas production. But these "costs," used by industry to fight new protections, are grossly exaggerated and one-sided. One study issued by the Independent Petroleum Association of America alleges that over half of the producing oil wells and over one-third of producing natural gas wells in the U.S. would be shut down. Another study issued by the American Petroleum Institute claims that new regulations could lead to a decrease in millions of U.S. jobs.

These studies, if taken at face value, leave us with this question: should Americans fear that protecting their health will come at the expense of their neighbor's job?

It turns out, these studies present us with an either/or scenario that's fundamentally false. A new economic critique of the publications  has detailed their fundamental flaws:

  • First, they fail to consider the wide range of alternatives for implementing the proposed regulations, including ways that could reduce costs and increase benefits.
  • Second, they completely ignore the economic benefits of the proposed regulations (one of the first principles I learned in graduate school, over 25 years ago, is that good policy analysis always includes looking at both the costs and benefits of any proposal).
  • And third, they grossly exaggerate the economic costs of the proposed regulations.

The critique was conducted by ECONorthwest, which specializes in the economic and financial analysis of public policy. It can be found in NRDC's Document Bank. The authors concluded: "The errors contained in the three reports are serious enough to render their findings untenable from an economic perspective."

This situation sounds similar to a dialogue recently heard at a hearing in the U.S. Senate regarding the repeal of tax benefits for the oil and gas industry. An industry CEO claimed that repeal of these tax benefits would, among other things, "slow the economic recovery," and "jeopardize the jobs of millions of industry workers." The U.S. Treasury Department, however, estimates that repeal "would have little adverse impact on oil and gas prices, production, and employment...."

Developing energy and protecting the environment is not an either/or scenario. We do not believe new environmental protections, such as the proposed FRAC Act, will harm the industry or its employees--and that is not our intention. Quite the contrary, actually - we strongly believe clean solutions are readily available, economical, and sometimes even profitable for industry. 

Consider the alternative---an alternative we're witnessing and experiencing right now across the country---poisoned water, dead livestock, and destroyed landscapes, as I've mentioned in other blog posts. There needs to be a balance - which is why we're working to pass the FRAC Act. It's a common sense approach, especially when drinking water and human health are at risk.