Fracking ban is just a feel good gesture

Environments are all atwitter about Gov. Gavin Newsom's 2021 phase out of hydraulic fracking for oil finally being implemented. The California Department of Conservation's Geologic Energy Management Division recently issued a notice of a proposed regulation amendment under which it “will not approve applications for permits to conduct well stimulation treatments.” A hearing is set for March 26.

Fracking injects fluid into rock formations to force out gas and oil. The oil industry says it's safe. Environmentalists maintain it hurts the environment and the health of local residents. Spokesperson Jacob Roper said the change will boost the department's “ability to prevent damage to life, health, property, and natural resources,” and cut greenhouse gas emissions. Actually, the last permits were issued in 2021 in anticipation of this change.

The fracking ban won't have much effect on prices at the pump because the California oil industry swims in a global market, explains Robert Michaels, a professor of energy economics at Cal State Fullerton.

“Banning fracking is basically just a gesture because it's not a very big part of California energy supplies,” he said.

Last December the department's Geologic Management Energy Division estimated the state economy would lose $190 million over 10 years, with supposed increases in health and other benefits of $140 million. The ban will cut state income tax receipts by $53 million a year. Fracking only occurs in Kern County, whose property tax revenues will drop less than 1%.

This is part of the state's ban on new gasoline-powered vehicles by 2035. As Newsom said in 2021, “I've made it clear I don't see a role for fracking in that future and, similarly, believe that California needs to move beyond oil.”

But that's not going to happen, Michaels said.

“It's something California does to feel good.” EVs currently comprise 20% of the state's vehicles. But for the first time sales dropped in the second half of last year, reported the Los Angeles Times. Problems include Americans' preference for large SUVs, which need bigger and heavier batteries, and not enough chargers. The California Energy Department calculated only 93,855 chargers are online compared to the 250,000 the state planned for by 2025.

Further, solar energy, which is supposed to replace plants powered by coal and gas, continues to be dominated by China — which has problems with the United States over Taiwan and other issues. President Biden's protectionist Inflation Reduction Act of 2022 put high tariffs on Chinese solar panels. That backfired. The Feb. 6 Wall Street Journal reported Chinese companies shifted production to Mexico – where the plants get U.S. taxpayer subsidies under the IRA.

The fact is these feel good policies might look good for politicians seeking higher office — in Newsom's case, eventually the highest office in the land. But they have little practical effect. As the 2035 100% renewable deadline approaches, drivers and car dealers will pressure the politicians to push that policy off a cliff.