Fracking has led to substantial increases in U.S. domestic oil and gas production, thereby significantly reducing the need for oil imports. U.S. net imports of oil, after a 30-year steady rise, have begun to fall in the past decade, and the fall coincides with a major increase in domestic oil production, which is due in large part to expansion of fracking, or hydraulic fracturing. Fracking involves using horizontal drilling to access shale deposits previously unavailable through conventional drilling methods. The use of the fracking technique has enabled energy companies to obtain very large quantities of oil and natural gas.

Prior to the development of fracking technology, these oil and gas deposits found in shale were considered essentially useless because the cost to extract them was prohibitively expensive. Fracking changed that equation and led to a new boom in oil and gas production in the U.S. As a result, total U.S. crude oil production increased by more than 50% in less than a decade. Over the same time period, the amount of total U.S. oil consumption provided by imports fell from roughly 60% down to 45%. While that still leaves the U.S. heavily dependent on foreign oil, it is nonetheless a very significant reduction in the level of dependence since it means the country is capable of providing over half of its fuel needs.

The fracking-created oil boom has also had beneficial effects on the economy as a whole, playing a significant part in the reduction of gasoline and natural gas prices and creating hundreds of thousands of jobs. One large shale area, the Bakken formation in North Dakota, has led to such a sudden surge in employment and population in the area that construction companies are unable to build housing fast enough to keep up with the population growth. The natural gas industry that once voiced concerns over eventually exhausting the domestic supply of natural gas has such a massive excess of supply, it is rapidly expanding its business to include exporting natural gas to Europe and Asia. Shipping terminals built to facilitate the receiving of liquefied natural gas imports are being reworked to support exports.

For all its benefits in the area of energy independence, lowered fuel prices and job creation, fracking is not without its detractors. The technique, which uses sideways drilling into shale formations aided by the use of gigantic water cannons to fracture surrounding rock to free the oil and gas deposits, has been and remains very controversial. Fracking has been attacked by environmentalists on a number of fronts. The long-term impact of weakening underground rock formations through the fracturing technique is widely questioned. Additionally, the massive amount of water used in the fracking process has led to water shortages in some drilling areas. Potential groundwater contamination is another concern.

Environmental concerns have been largely brushed aside in favor of concentrating on the spectacular boost in oil and gas production enabled by fracking, a boost that has the U.S. poised to pass Saudi Arabia as the number one oil producer in the world.

  1. What are the effects of fracking on the environment?

    Even though fracking has the potential to provide more oil and gas to consumers, the process has long-lasting negative impacts ... Read Answer >>
  2. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America, and actions taken by Saudi Arabia played ... Read Answer >>
  3. How does the law of supply and demand affect the oil industry?

    Learn how the law of supply and demand affects the oil industry. Supply and demand determines the price of oil, which drives ... Read Answer >>
Related Articles
  1. Investing

    Countries With The Highest Fracking Potential

    Is fracking a "necessary evil," as some believe? Here are some countries with huge fracking potential--and what they stand to lose or gain from fracking.
  2. Investing

    How Fracking Affects Natural Gas Prices

    Whatever you think of fracking, it has done one thing: kept the price of natural gas from increasing any more than it has.
  3. Investing

    With Fracking It’s All About Water Management

    It takes an awfully large amount of water to frack an oil and gas well these days. Given the growth projections for production activity in the U.S. and Canada, water management could be one of ...
  4. Investing

    The Cost of Shale Oil Versus Conventional Oil

    Fracking technology has brought new costs to the oil extraction process, and that has an impact on the profitability of the deposits being drilled.
  5. Investing

    The Reasons for the Mexican-U.S. Oil Swap

    The U.S. government is getting close to a historic deal to allow U.S. producers to swap the light, sweet crude oil that is in too much supply with Mexico, in return for heavy crude.
  6. Investing

    How Oil Prices Impact the U.S. Economy

    Now that the United States has increased oil production through shale oil and fracking, low oil prices can harm the U.S. oil industry and its workers.
  7. Investing

    Shale Oil vs. Oil Shale: What's the Difference?

    The biggest difference between oil shale and shale oil is that one is still a money-making proposition.
  8. Investing

    3 Ways To Lower Gas Prices

    Gasoline is expensive. From increasing overall supply to lowering demand, there are a few ways gas prices could drop.
  9. Investing

    4 Reasons Natural Gas Is So Cheap

    An unseasonably warm winter wasn't the only reason why prices were cheap.
  1. Shale Oil

    Shale oil is a type of unconventional oil found in shale rock ...
  2. Oil Shale

    Oil shale is a sedimentary rock containing enough kerogen that ...
  3. Exploration & Production - E&P

    An exploration & production company is known to be in a specific ...
  4. Barrels Of Oil Equivalent Per Day - BOE/D

    A term that is used often in conjunction with the production ...
  5. Unconventional Oil

    Unconventional oil is petroleum that is extracted and processed ...
  6. Change In Supply

    A change in supply is a term used in economics to describe a ...
Hot Definitions
  1. Business Cycle

    The business cycle describes the rise and fall in production output of goods and services in an economy. Business cycles ...
  2. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  3. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  4. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  5. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  6. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
Trading Center