State Level Energy Regulation

From The Heritage Foundation, a good example of why individual states are best equipped to be in charge of energy policy:

One of the reasons why hydraulic fracturing has been so successful in promoting oil and gas development, while maintaining a strong environmental record, is the state regulatory regime. States in which fracturing takes place each have comprehensive regulation that ensures that oil and gas companies operate safely and in an environmentally sensible manner, and administer fines and implement punitive measures to correct any wrongdoing.

In November 2011, Lisa Jackson, the head of the U.S. Environmental Protection Agency, acknowledged the state’s role, stating that, “States are stepping up and doing a good job. It doesn’t have to be EPA that regulates the 10,000 wells that might go in.”

But states are not just now stepping up. They’ve effectively regulated oil and gas production and hydraulic fracturing for decades. In Ohio, fracking has been taking place since the 1960s, with more than 70,000 oil and gas wells fracked with no instances of contaminated groundwater.

And despite Lisa Jackson’s pronouncements, the EPA has proposed expensive regulations for the hydraulic fracturing industry, regulations they are likely sitting on until the results of November’s election:

In April 2012, the EPA announced its first air-emission rules for hydraulic fracturing. But the rule miserably fails the cost-benefit test; the agency’s own analysis projects $745 million in annual costs and just $11 million to $19 million in environmental benefits. Moreover, the EPA has grossly overestimated methane emissions, a greenhouse gas, from the wells. Plus, reducing methane emissions would have no noticeable impact on the earth’s temperature.

Wouldn’t you think that an agency whose own analysis concluded that the costs exceeded the benefits would not continue pushing the rule changes? You would be wrong.

Top down regulations by the EPA impact all of the state, preventing them from considering the benefits and costs of hydraulic fracturing on their own. Each state has the most to lose from hurting their environment, as the states residents have to live with the consequences. They also have the most to gain from allowing fracking, like the numerous jobs created by the industry, lower natural gas prices, etc. Simply put, it is unlikely that we would have seen this enormous jump in production in areas like North Dakota given federal regulation of hydraulic fracturing:




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