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Are You Fracking Kidding Me, Trump?

The president’s latest electoral Hail Mary: He’s considering ordering federal agencies to produce a report on fracking that will emerge months after the election and which no one will read.

Trump gesticulates in Pennsylvania.
Spencer Platt/Getty Images
Trump gesticulates in Pennsylvania.

Donald Trump, The Wall Street Journal reported on Wednesday, is mulling an executive order to make federal agencies perform an economic analysis of fracking—on the theory, presumably, that there’s no voter-seducing soundbite better than one involving the words “capital allocation.” It’s an odd last-minute play for fuel-producing swing states like Pennsylvania and Texas. As Pennsylvania faces 2,000 new coronavirus cases per day, you have to wonder how many undecided voters will swoon in anticipation of a hundred-page PDF that won’t be released until months after the election.

Then there’s the fact that fracking’s economic outlook is terrible. Any analysis the Trump White House commissions, of course, might well just regurgitate talking points from the American Petroleum Institute. But a serious report would probably observe that the fracking industry is in decline. Shale’s eleventh-hour prominence in this race, in that respect, is pretty weird.

Since Joe Biden’s possibly-maybe gaffe in the last presidential debate suggesting the country should eventually transition off oil at some future point, the GOP has doubled down trying to depict Biden as hell-bent on banning fossil fuels. The Biden campaign has vehemently denied those charges, reiterating the only direct constraints on fossil fuels that are actually in his platform: no new permits for fracking on federal land, where existing drilling already accounts for a quarter of all U.S. greenhouse gas emissions. (Biden’s plan wouldn’t touch existing drilling.)

Both the campaigns and the reporters covering them now seem to be debating the future of a shale business that hasn’t existed for several years now. While the conversation on an energy transition this last week has assumed climate policies will be the major driver of job losses in fossil fuels in the years to come, the notoriously overleveraged sector has been shedding workers prodigiously after years of unprofitability: More than 100,000 people have lost their oil and gas jobs in recent months. Wall Street investors, meanwhile, have lost their patience for companies’ big spending and low returns. It’s hard to blame them: Shale companies burned through $400 billion of investor cash between 2008 and 2018. The transition Trump is fearmongering about is already happening. If anything, his administration has sped it up.

Last week, the energy consultancy Rystad Energy found that debt held by bankrupt oil and gas producers had reached an all-time high this year. So far, 84 exploration and production firms and oilfield services companies—providing equipment to drill sites—have filed for bankruptcy this year, with a combined $89 billion debt load—$19 billion higher than that of the 124 companies that went bankrupt after the last fuel price crash in 2016. It could balloon to $100 billion by year’s end. A wave of consolidations across the oil and gas sector has cost thousands of jobs, too. Chevron, for instance, will lay off a quarter of Noble Energy employees by the time it finishes acquiring the company at the end of this month. The liquefied natural gas exporter Tellurian has laid off 40 percent of its staff, with a market capitalization now hovering around just $500 million. BP, ExxonMobil, and Shell have announced tens of thousands of layoffs, as well.

The fracking industry sought to kill jobs in the before times, too. Drillers poured their investors’ billions into machine learning and artificial intelligence—for example, from Amazon Web Services—to automate more parts of the production process, allowing them to drive down costs by getting rid of workers. The Ohio River Valley Institute finds that the labor share of value created there by fracking companies—that is, the portion of profits paid out to employees in salaries, wages, and benefits—ranges between just 7 and 19 percent, compared to the economy-wide average in that region of around 50 percent. Any additional financial support Trump might hope to shower on the industry—by helping develop new technology, as one source told The Wall Street Journal—will only further that process and kill more jobs. Enterprising White House analysts might be surprised to find that there are well over a million more actually existing jobs in renewables and energy efficiency than in coal, oil, and gas.

The coronavirus has sped along a reckoning in the sector that’s hit its workers hardest: 107,000 oil and gas employees have lost their jobs since March. Some 70 percent of those may never return, and those that do are likely to be weighted heavily toward white-collar fields like data analysis, according to the management consultant Deloitte. “Such large-scale layoffs,” Deloitte analysts write, “are challenging the industry’s reputation as a reliable employer.”

What’s common sense for those tracking the industry closely hasn’t percolated up to the national conversation, where both parties and the media still take fracking’s job-producing reputation for granted. If Donald Trump doesn’t do an economic analysis of fracking that shows it to be a sorry bet for job creation, a Biden administration should.