Tuesday, January 20, 2015

Fracking and Plunging Gas Prices

The anti-fracking movement in Colorado may be in trouble due to the plunging gas prices.

A two dollar gallon of gas and $46 barrel of oil depresses the momentum of anti-frackers as much as the revenue of the industry.
  • Exploration is going to be curtailed. There will be less new drilling activities in general and especially where costs are higher, including political costs (i.e., near urban areas). The threat to populations is declining, reducing NIMBY sentiment.
  • The cutbacks will affect jobs, government revenue and business activity. Gas and oil activity and revenue have been a major contributor to Colorado’s recovery, including downtown Denver and the north and east suburbs. Maintaining the industry will be seen as even more important and it will be seen more sympathetically. Who wants to cause more economic difficulty for the industry at this time?
  • The politics, especially for Democrats, get more difficult. Anti-fracking always appeared to be anti-jobs. With the industry contracting, Democrats are more vulnerable.
  • The Governor’s task force on fracking decisions concerning new regulations are due February 27. Even a modest effort to increase local control or limit drilling may be endangered. The urgency of regulation is declining.

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