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Thursday, April 8, 2021

California Moves to Ban Fracking—as Gas Prices Hit 3-Year High

California’s proposed ban on fracking comes as global demand for energy is increasing.

Image Credit: KOMUnews | CC BY 2.0 (

Californians often serve as test subjects for progressive policies. With its latest proposed ban, the Golden State may end up serving as a cautionary tale.

“Answering the call of Gov. Newsom, Democratic California lawmakers introduced a bill to ban fracking by 2027, in the fifth largest economy in the world,” Fox Business reports. “The bill, from Democratic state Sens. Scott Wiener of San Francisco and Monique Limon of Santa Barbara, would prohibit new fracking permits or renewals by Jan. 1, 2022, while also banning permits within 2,500 feet of homes or schools.”

What Is Fracking?

“Fracking,” which is short for “hydraulic fracturing,” is the process of drilling into the earth and blasting components—a mixture of water, sand, and chemicals—into shale rock to retrieve gas and oil.

Fracking has been instrumental in the recent energy renaissance in America, which saw the US become the world’s top producer of oil and sharply reduced prices of fossil fuels. A 2020 New York Times article described fracking as “an economic savior” for Rust Belt states that arrived as the US economy remained in free fall amid the Great Recession.

While some might think of fracking as new, it’s not. As the Independent Petroleum Association of America points out, fracking has been employed in the United States since the 1940s. Since then, the process has been used to create 1.7 million wells, from which more than 600 trillion cubic feet of natural gas and seven billion barrels of oil have been extracted.

The Economic Benefits of Fracking Are Enormous

As Justin Wolfers of the left-leaning Brookings Institution has explained, the economics of fracking are not complicated. The process vastly simplified the extraction of fossil fuels, which made production less expensive and therefore reduced prices.

“Overall that makes consumers better off,” Wolfers explained.

How much better off? Quite a bit.

“The US fracking revolution has caused natural gas prices to drop 47 percent compared to what the price would have been prior to the fracking revolution in 2013,” Brookings concluded in a 2015 paper exploring the economic benefits of fracking.

Why Some Environmentalists Want to Ban It

So why does anyone want to ban such an economically beneficial practice?

The primary concerns about fracking are environmental. The author of the new ban, California State Senator Scott Wiener, argues that “Extracting massive amounts of oil — particularly with destructive techniques such as fracking — is totally inconsistent with California’s commitment to a sustainable climate future.”

Yet the innovative practice of fracking has actually helped reduce CO2 emissions, by hastening a switch away from coal-generated power, which emits substantially more greenhouse gases than natural gas. The Hill reports that “since 2005, natural gas has prevented more than one billion metric tons of carbon dioxide from being emitted from power plants in the United States.” And banning fracking would simply result in more foreign oil tankers being brought into California, experts warn.

Opponents also cite alleged water contamination and other environmental concerns as reasons to ban fracking. But as I explained in a 2020 article in National Review, an abundance of research suggests these concerns are largely unfounded.

Some might say these concerns still warrant intervention. But it’s important to understand California’s ban would come with serious costs.

The fossil fuel industry supports roughly 366,000 jobs state-wide, according to Fox Business. California Assemblyman Vince Fong warned that the state’s regulatory move would “devastate the local economy” and “destroy careers in California.”

There’s little doubt that California’s ban would place thousands of livelihoods in jeopardy. But the reality is that the effects would go well beyond those employed in the industry—and well beyond the Golden State.

Horrible Timing: Restricting Energy Markets as Fuel Prices Rise

After a year of quarantines, closures, and cancelations, many Americans are likely eager to get back on the road and enjoy spring break and summer vacations.

Unfortunately, they’ll be doing so at an expensive time.

A new federal report shows that gas prices are expected to average $2.78 per gallon from April to September. As The Star Tribune notes, that’s more than 30 percent higher than last year and the highest since 2018. And Energy Information Administration Acting Administrator Steve Nalley says all signs suggest gasoline prices will continue to rise as travel picks up post-pandemic.

A ban on fracking in California would make oil, and therefore gasoline, even more expensive. As Investopedia explains, “Hydraulic fracturing has helped boost the rate at which oil and gas can be extracted from wells, particularly in the United States. By increasing the current available supply, fracking helps to lower oil prices on a global scale. This is particularly true domestically, since oil does not have a historically strong local market in the U.S.”

To be clear, California’s proposed ban, should it pass, may not result in higher prices at the pump this summer. The prohibition on new fracking permits and renewals would not go into effect until next year, and it’s unclear how futures markets would respond to such a move.

But the California legislation banning a key energy innovation comes at a time when we’re witnessing a global increase in the demand for energy and skyrocketing energy prices. Restricting fracking won’t really help the environment, but it will cost many Californians their jobs—and stick Americans with bigger energy bills when they can least afford it.

The Perils of Market Meddling

Politicians meddling in markets should never be taken lightly. History is replete with examples of government interventions in energy markets that led to disastrous results.

For example, in 1971, President Richard Nixon implemented price controls on gasoline, oil, petroleum products. These controls, kept in place by his successors, were the primary cause of the 1970s energy crisis, in which gas stations ran dry and people waited in their cars for hours in long lines to fill up.

California lawmakers fortunately don’t have the amount of power Richard Nixon did. And they may genuinely believe (unlike Nixon) they are simply designing a better, cleaner world by banning fracking. But they’d do well to make sure they aren’t doing more harm than good.

“Almost nothing matters more to our lives,” wrote Alex Epstein in The Moral Case for Fossil Fuels, “and the lives of billions of others around the world than the existence of cheap, reliable energy.”

  • Jonathan Miltimore is the Senior Creative Strategist of at the Foundation for Economic Education.
  • Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and the co-founder of BASEDPolitics. He was Policy Correspondent at FEE from 2020 to 2022.