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 the 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.

Development of Fracking Technology

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.

Fracking and Its Detractors

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. How does fracking affect oil prices?

    Read about the short- and long-term impacts of hydraulic fracturing, also known as fracking, on global oil markets and oil ... 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 do government regulations impact the oil and gas drilling sector?

    Find out how government regulation of the oil and gas sectors is often positive for the large companies, but may be negative ... 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

    What is Fracking?

    Fracking, a slang term for hydraulic fracturing, is a method for extracting natural gas from sedimentary rocks.
  3. 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.
  4. Investing

    Fracking and Other Oil Drilling Tech: A Primer

    Well-stimulation technologies have fundamentally changed the market through their recent widespread adoption in North America. Here's a rundown.
  5. Investing

    Oil Rebound Could Bode Well for Fracking Stocks (RSPP, HES)

    Now that OPEC has cut production costs and oil prices have risen, will the oil and gas industry finally rebound? And will fracking stocks follow suit?
  6. 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 ...
  7. Investing

    Guide To Oil And Gas Plays In North America

    Oil and gas shales in North America have been known for decades, but most investors don’t know it exists, or what is produced.
  8. Insights

    4 Things to Know About the Future of US Energy

    The fracking revolution has underpinned the U.S. energy industry in recent years, with positive trends likely to continue into the next decade.
  9. Insights

    Chesapeake Sets Record with Massive Frack (CHK)

    Production jumps 70% after company pumps 25,000 tons of sand into the well, a process drillers dubbed “Propaggedon.”
  10. Investing

    Alternative Ways To Play The Marcellus Shale

    As America searches for energy independence, natural gas consumption will increase.
  1. Shale Oil

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

    A horizontal well is an oil or gas well that is dug at an angle ...
  3. Natural Gas ETF

    A natural gas ETF is an exchange-traded fund designed as a commodity ...
  4. Re-fracking

    Re-fracking is the practice of returning to a previously fracked ...
  5. Energy Sector

    The energy sector is a category of stocks that relate to producing ...
  6. Liquefied Natural Gas (LNG)

    Liquefied natural gas (LNG) consists mostly of methane and is ...
Trading Center