More than six weeks after Russia’s invasion of Ukraine and an unprecedented scramble to reduce the West’s reliance on Russian oil, a narrative about America’s newfound position as a leading fossil fuel producer (and provider) has taken firmer hold of the country’s imagination. To some, it’s almost as though fracking has saved American democracy.
This pairing of ideas is hardly new. For decades, the United States has been chasing the dragon of “energy independence” as core to its international interests. It was true the last time the country was dealing with high gas prices, in the wake of the 1973 oil crisis. Back then, the U.S. was the one being sanctioned—by the Arab members of OPEC for American support of Israel during the Arab–Israeli war. The shock of high gas prices and rationing prompted the U.S. government in 1975 to put a ban on U.S. companies exporting oil and gas. That ban remained in place until 2015 when President Obama, after an intense amount of lobbying pressure from the petroleum industry during the heady days of the fracking boom, lifted it.
By then, interests had flipped, and now exporting fracked oil and gas was positioned as helping the domestic goal of energy independence. All of a sudden, there were plenty of fossil fuels to go around. If we could be global suppliers of the world’s oil and gas, the story went, we would have more power over world events. “They told people here [in Appalachia], whose sons were off fighting in Iraq, that it was their patriotic duty to lease their land for fracking. That this was how we would get out of Iraq and avoid the next war in the Middle East,” says Heaven Sensky, who works with the nonprofit Center for Coalfield Justice.* The truth, however, is that the “drill, baby, drill” playbook that has driven domestic policy for more than a decade has failed to deliver the promised energy security. Americans are just as dependent on and impacted by the global energy market as any other country, and now the country’s position as an oil and gas exporter is helping push America toward an escalating energy confrontation with its Cold War foe—with the help of frackers eager to “rescue” Europe by snatching away Russia’s customers.
As the old saying goes, if we’re fooled twice, shame on us.
It’s hard to overstate the hype that surrounded fracking, and the bipartisan support it enjoyed, in America throughout the 2010s. In Obama’s 2012 State of the Union address, he declared that fracking could unlock enough natural gas from under America’s soil to supply cheap domestic energy for a hundred years. Fracking also offered the promise of escaping the seeming inevitability of Rust Belt decline. Obama predicted that it would create 600,000 jobs by the end of the decade, and in 2016, then-presidential candidate Ted Cruz proclaimed that the industry would create “millions of millions of new high-paying [manufacturing] jobs.” What’s more, because methane combustion emits about half as many pounds of carbon dioxide per million BTU of energy as does coal, shale gas was also widely touted as a “bridge fuel” to renewable energy.
This has all contributed to a silver-bullet mythos around fracking that is almost wholly divorced from the facts. At the height of the boom, many rural Pennsylvanians were under the expectation that they would eventually be able to tap into the cheap supply of natural gas being extracted from beneath their homes. This didn’t happen; the industry was more keen on championing the completion of dozens of liquified natural gas facilities to export the glut of methane abroad, where it fetched a higher price. A bombshell report produced by the Ohio River Valley Institute last year found that gas drilling has not lifted the financial outlook of Appalachian shale communities and may have even made the regional economy worse. On the environmental front, the methane emissions associated with fracking are so pervasive that many scientists now think that substituting natural gas for coal won’t reduce greenhouse gas emissions. (Not to mention that fracking has become notoriously associated with drinking water contamination.)
Perhaps most astounding, the fracking industry never really managed to make money. “It’s an industry that’s been phenomenally successful at producing oil and gas, but has been terrible at producing cash,” says Clark Williams-Derry, an energy finance analyst with the Institute for Energy Economics and Financial Analysis. “These companies have always struggled to produce positive free cash flow, which is what you use as a company to reward your investors and pay down your debt.”
The push to export fracked gas, then, was driven not by a patriotic duty to liberate our allies with “molecules of U.S. freedom” but by a desperate need to get out of debt and turn a profit. But capitalism and patriotism are things the fossil fuel industry has conflated masterfully for its existence. “For decades they have been … tying their product to the American way of life and everything good about America,” explains Brown University sociologist Dr. Robert Brulle, who studies fossil fuel misinformation campaigns. Industry-funded media outlets have relentlessly campaigned to convince rural landowners in Pennsylvania and elsewhere that the anti-fracking movement is driven by liberal “urban elites” bent on waging class warfare against America’s heartland residents and stripping them of their property rights.
Unfortunately for the frackers, none of it has really allowed the industry to start raking it in. They kept ramping up production and cheered when Trump announced that the U.S. was now the top supplier of gas in the world, but they still couldn’t turn that production into profits. In fact, the only thing that saved most fracking companies from bankruptcy in 2020 was, ironically, the COVID-19 pandemic. A good excuse to lower production gave them the ability to dramatically cut costs and lay off workers, and government relief programs enabled them to get federal loans and delay paying back their bank loans. Fracking companies held on by the skin of their teeth. Now, with the response to Russia’s invasion, the universe has provided for them again. At the moment when bipartisan support for fracking has eroded, blue chip companies have massively divested from fossil fuels, and many residents in fracking country have grown supportive of a ban on unconventional drilling, the invasion has provided frackers with both an economic and a rhetorical gift. Freedom gas to the rescue.
Ever since Russia annexed Crimea in 2014, the American oil and gas industry has been preparing for this moment. The U.S. government responded to the annexation with harsh sanctions, messing with Exxon’s investments in Russia and its partnership with the state-owned oil company Rosneft. Given that Putin has continued supporting separatists in Ukraine since then, it wasn’t beyond the realm of possibility that another Crimea-like event might happen, and the industry wasn’t going to be caught off-guard again. No surprise, then, that the American Petroleum Institute at first lobbied the government to hold off on enacting sanctions that might hurt American companies operating in Russia when Putin began his troop buildup along the border. Various executives and trade groups were sending letters to the White House the morning after the invasion asking for volume increases on permits at existing liquid natural gas (LNG) facilities (which the Department of Energy granted within two weeks) and for the fast-tracking of approvals for new LNG terminals and pipelines. Sanctions were now becoming an opportunity. Two days after the initial invasion, the API started social media campaigns asking the Biden administration to lift regulations that were keeping them from producing more oil and gas. No such regulations exist, and the industry’s top lobbying group knows that. But they couldn’t very well risk the American public thinking they were the ones choosing not to produce more oil and gas. When Biden announced a ban on imports of Russian oil, the campaigns grew louder.
Of course, nothing at all about American sanctions on Russia affected the actual supply of gasoline at the pump—those high prices are the result of markets reacting to the news and speculating about what might happen if more countries say no to Russian oil and gas or if Putin makes good on his promise to take his barrels and go home. Biden’s promise to ship more LNG to Europe may soften the blow of rising energy prices there, but it won’t be enough to replace Russian gas (and threatens to hamper both superpowers’ transition to renewable resources). And U.S. companies are already producing exactly as much oil and gas as they want to be producing. They—not the government—set their own production volume, and petroleum executives have been telling their shareholders—promising them, in fact—that they will not increase production, even if the price of oil hits $200 a barrel. Why? The same old fracking cash flow problem.
For the first time since the early days of the shale gas and oil boom, fracking companies are actually paying shareholders decent dividends. After a number of boom and bust cycles, they’re promising those shareholders that they will hold steady, cash in on high prices, and keep paying out. Meanwhile, the oil majors are replenishing their coffers after taking a big hit in the pandemic. Like the fracking execs, ExxonMobil CEO Darren Woods has told shareholders he’s more interested in higher prices per barrel than producing more barrels.
But once again we’re hearing the familiar cry of “energy independence” and American jingoism. We’re being told that exporting oil and gas to Europe ensures our national security, and that high gasoline prices at home are Putin’s fault. If anything, what the Russia ordeal has shown us is that we are entirely beholden to global markets and world events because we are an exporter. And because of our reliance on fossil fuels and our indulgence of the fossil fuel industry. The only way America will ever truly achieve energy independence is to get off of fossil fuels altogether.
Correction, May 19, 2022: This article originally misidentified Heaven Sensky as a fracking leaseholder.