It may be several years before we fully understand and appreciate the benefits our country derives from fracking.
We already know that chemical companies are planning to invest in the United States by building new plants that will create more jobs by using low-cost natural gas. We know that low-cost natural gas benefits those who heat their homes with natural gas. We also know that low-cost natural gas is lowering the cost of electricity.
We also know that fracking has resulted in an increase in oil production, which is allowing the United States to forego imports from the Mideast and Venezuela, which improves our balance of payments and provides more royalty payments and fees to the federal and state governments.
Now we realize that fracking can benefit refineries located in the United States, saving and possibly increasing jobs.
Refineries need large amounts of heat and hydrogen, both of which are provided by natural gas. Low-cost natural gas lowers the cost of refining crude oil.
Fracking has also increased the quantity of light sweet crude produced in the United States, and it’s this type of crude that is easiest to process. Heavier crudes, such as from Canada, need more hydrogen, which is also available because of fracking.
This can benefit Americans by keeping the price of gasoline lower than it otherwise would be.
Not only will the United States be able to export LNG, but it will be able to export gasoline and other refinery products that are produced more inexpensively in the United States.
The Latin American market beckons because of a lack of investment in refineries in the region and because South America lacks the low-cost natural gas needed as a source of heat and hydrogen.
With the advent of fuel economy standards (CAFÉ) and smaller cars, it’s projected the United States will use less gasoline. Without low-cost natural gas, refineries in the United States could be in economic difficulties as the domestic market for gasoline declines. Without the South American market, it might be necessary to close more refineries in the United States, with a concurrent loss in jobs.
Low-cost natural gas from fracking can keep those refineries open.
Paraphrasing from Elizabeth Barrett Browning: How does fracking help America? Let me count the ways.
Read more of Donn’s columns at his blog, Power For USA.
© Power For USA, 2010 – 2012
Photo credit: darthpedrius (Creative Commons)