Have frackers pushed their luck too far?

Over the past week, I've heard from serious observers of the U.S. shale gas industry -- from investment analysts, think-tank scholars and others -- that we seem near a tipping point in the heated debate over the companies' drilling methods: If there is another serious accident or two in which shale gas drillers appear to have polluted a water aquifer, look for significant regulatory curtailment of the industry, as one investment analyst put it.

If such a backlash occurs, it would be a significant turnaround for an industry that has been widely embraced as a savior, particularly for the possible role it could play in curtailing the emission of heat-trapping gases by allowing for a reduction of coal consumption.

We are talking about the practice of hydraulic fracturing, or fracking, in which millions of gallons of chemically laced water are injected at great force into hard underground shale, breaking it up and allowing trapped gas to be extracted. In recent years, this new technology has turned the U.S. gas supply from deficit to significant surplus -- accepted forecasts are that the country has a 100-year supply of gas at current consumption levels.

Only, fracking has frightened many communities where it is conducted. The main apprehension is that the practice can poison water supplies, such as a Duke University report disclosed last month. The industry denies fracking has caused any such pollution, yet numerous communities in Pennsylvania have already risen up and banned the practice, writes Kris Maher of the Wall Street Journal. Tisha Conoly-Schuller, CEO of the Colorado Oil and Gas Association, told an industry conference yesterday that "the public is skeptical of anything we say. ... The public does not believe us," reports Natural Gas Watch.

A federal regulatory clampdown could have geopolitical consequences -- political and economic decision-makers around the world have begun to figure the shale gas revolution into their calculus. Among other impacts, shale gas has appeared likely to keep Russia back on its heels in Europe; to help make China cleaner; and to help curtail the global emission of heat-trapping carbon.

But such a development would also come as no surprise:  It has been clear for at least a year that the industry confronts a conspicuously moving anti-shale gas train, and that if it failed to get in front and lead the charge for environmentally safe drilling, it risked a hostile response. Now, according to the observers with whom I've been speaking -- many of whom are pro-industry -- the drillers appear to have waited too long.

Of course, these observers could be over-thinking -- at least one of them in fact dissented from the rest. He reminded me that oil and natural gas producers are aggressively resistant to regulation because generally they get away with it: Americans want to drive their cars and fly to Hawaii, and only in rare cases have strangled the industry's ability to operate. What comes immediately to mind is the continued moratorium on oil drilling off the coast of California since the 1969 Santa Barbara oil spill.

Even so -- even if he turns out to be right -- I have still found it mystifying why the industry hasn't played it safer and guarded against the risk that it could be wrong-footed. And indeed the investment analyst to whom I refer in the first paragraph of this post thinks that shale gas will turn out to be treated fundamentally differently from oil. Why? Because while large swaths of the public don't believe in global warming, they by and large do passionately care about clean water. And that's what the debate will pivot on -- a public uncertainty that water supplies are safe in proximity to shale gas drilling.

Until now, the industry has engaged in group behavior -- large companies including ExxonMobil and Chevron have persuasively vowed to disclose the chemical content of their fracking fluid, and adhere to ultra-safe methods of installing well-casing so as to protect drinking water. But neither Exxon nor Chevron has unilaterally released this data, nor brow-beat the industry's bad actors -- generally much smaller independent companies -- into cleaning up their act.

This refusal to break ranks is typical of groups. It's what John Forbes Nash of "A Beautiful Mind" fame (pictured above) won his Nobel for -- the Nash Equilibrium, which says that individuals within a group pursue their best interest while also weighing how others in the same group will act; they will stay with that decision -- or equilibrium -- even if another way would result in a better outcome for all group members. So even though big industry players do feel they might stave off the growing public backlash if they went pro-actively environmental, they won't do so unless they are convinced most or all their rivals will at the same time or soon after. They think that the knowledge of the chemical content of their fracking fluid is too precious.

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