Menus Subscribe Search

Follow us


Stack of chemical barrels

(Risto Viita /Shutterstock)

Frac-o-nomics: More Gas Won’t Guarantee Lower Prices

• June 04, 2012 • 4:00 AM

(Risto Viita /Shutterstock)

As humble guar gum illustrates, the economics of producing more fossil fuels won’t automatically result in lower prices, nor will increased protections necessarily mean big price increases.

A rush in fracking natural gas in the American West has led to Indian guar gum prices flapping upwards like those famous Beijing butterflies of chaos theory. Every American gas well that’s fracked requires about nine metric tons of guar gum, a viscous gel made from the guar bean. Guar gum—also used in ice cream and other foods—makes the “proppants” that are jammed into fractures in shale rocks more viscous and more slippery, which helps free more of the natural gas trapped in the rocks.

As an excellent Reuters article explains, runaway demand for guar beans has transformed the sleepy farms of India’s desert province of Rajasthan. “Guar changed my life,” says a farmer whose income quintupled last year. “Next season I will even try to grow guar on the roof.” Meanwhile, higher guar prices increase the cost of fracking—according to the article, it can be 30 percent of the cost of fracking a well.

I bring up the chaos theory of guar gum because there’s a persistent belief in the U.S. that if we simply increase drilling for supplies of fossil energy, the price will come down. (“Drill baby, drill!” is this idea in its simplest form, but it’s broadly embraced by Republicans and Democrats alike.) Some suggest there is a “choice” between high prices for natural gas and high environmental standards on fracking. This is a false dichotomy. More drilling has already led to an increase in production costs and a decrease in selling price, which is decreasing supply. As you can see from the guar gum example: More drilling means higher costs for drilling, i.e. more expensive guar gum, drilling rigs, labor, and the rest. At the same time, more drilling makes gas prices fall.

Since last year they’ve fallen by 62 percent, and April 19 saw a 10-year low in natural gas prices. That means drilling stops—which is exactly what’s happened in Michigan, where a gas rush has tapered off because there’s too much natural gas available, too cheaply, and simply no point in investing in it.

What will ensure supply? Higher prices, of course.

A new report out of the International Energy Agency suggests that gas needs to be at least twice as expensive to be “sustainable” in the U.S. The IEA was formed in the mid-1970s as the oil-consuming countries’ rival to OPEC, the oil producers cartel, which was throttling back production to push oil prices up. Now, in an ironic twist, the IEA is essentially advocating setting prices for natural gas. (OPEC itself is based on the Railroad Commission of Texas, which started limiting oil production to keep prices higher in Texas in the 1930s, something the commission continues today).

The IEA, meanwhile, isn’t buying that there’s a dichotomy between supply and environmental regulation. Instituting consistent and better environmental practices would raise natural gas production costs by just 7 percent, it says.

Lisa Margonelli
Lisa Margonelli is the author of Oil On the Brain: Petroleum's Long, Strange Trip to Your Tank. She is currently working on a book about termites.

More From Lisa Margonelli

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

December 20 • 10:28 AM

Flare-Ups

Are my emotions making me ill?


December 19 • 4:00 PM

How a Drug Policy Reform Organization Thinks of the Children

This valuable, newly updated resource for parents is based in the real world.


December 19 • 2:00 PM

Where Did the Ouija Board Come From?

It wasn’t just a toy.


December 19 • 12:00 PM

Social Scientists Can Do More to Eradicate Racial Oppression

Using our knowledge of social systems, all social scientists—black or white, race scholar or not—have an opportunity to challenge white privilege.


December 19 • 10:17 AM

How Scientists Contribute to Bad Science Reporting

By not taking university press officers and research press releases seriously, scientists are often complicit in the media falsehoods they so often deride.


December 19 • 10:00 AM

Pentecostalism in West Africa: A Boon or Barrier to Disease?

How has Ghana stayed Ebola-free despite being at high risk for infection? A look at their American-style Pentecostalism, a religion that threatens to do more harm than good.


December 19 • 8:00 AM

Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.


December 19 • 6:12 AM

All That ‘Call of Duty’ With Your Friends Has Not Made You a More Violent Person

But all that solo Call of Duty has.


December 19 • 4:00 AM

Food for Thought: WIC Works

New research finds participation in the federal WIC program, which subsidizes healthy foods for young children, is linked with stronger cognitive development and higher test scores.


December 18 • 4:00 PM

How I Navigated Life as a Newly Sober Mom

Saying “no” to my kids was harder than saying “no” to alcohol. But for their sake and mine, I had to learn to put myself first sometimes.


December 18 • 2:00 PM

Women in Apocalyptic Fiction Shaving Their Armpits

Because our interest in realism apparently only goes so far.


December 18 • 12:00 PM

The Paradox of Choice, 10 Years Later

Paul Hiebert talks to psychologist Barry Schwartz about how modern trends—social media, FOMO, customer review sites—fit in with arguments he made a decade ago in his highly influential book, The Paradox of Choice: Why More Is Less.


December 18 • 10:00 AM

What It’s Like to Spend a Few Hours in the Church of Scientology

Wrestling with thetans, attempting to unlock a memory bank, and a personality test seemingly aimed at people with depression. This is Scientology’s “dissemination drill” for potential new members.


December 18 • 8:00 AM

Gendering #BlackLivesMatter: A Feminist Perspective

Black men are stereotyped as violent, while black women are rendered invisible. Here’s why the gendering of black lives matters.


December 18 • 7:06 AM

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.


December 18 • 6:00 AM

The Very Weak and Complicated Links Between Mental Illness and Gun Violence

Vanderbilt University’s Jonathan Metzl and Kenneth MacLeish address our anxieties and correct our assumptions.


December 18 • 4:00 AM

Should Movies Be Rated RD for Reckless Driving?

A new study finds a link between watching films featuring reckless driving and engaging in similar behavior years later.


December 17 • 4:00 PM

How to Run a Drug Dealing Network in Prison

People tend not to hear about the prison drug dealing operations that succeed. Substance.com asks a veteran of the game to explain his system.


December 17 • 2:00 PM

Gender Segregation of Toys Is on the Rise

Charting the use of “toys for boys” and “toys for girls” in American English.


December 17 • 12:41 PM

Why the College Football Playoff Is Terrible But Better Than Before

The sample size is still embarrassingly small, but at least there’s less room for the availability cascade.


December 17 • 11:06 AM

Canadian Kids Have a Serious Smoking Problem

Bootleg cigarette sales could be leading Canadian teens to more serious drugs, a recent study finds.


December 17 • 10:37 AM

A Public Lynching in Sproul Plaza

When photographs of lynching victims showed up on a hallowed site of democracy in action, a provocation was issued—but to whom, by whom, and why?


December 17 • 8:00 AM

What Was the Job?

This was the year the job broke, the year we accepted a re-interpretation of its fundamental bargain and bought in to the push to get us to all work for ourselves rather than each other.


December 17 • 6:00 AM

White Kids Will Be Kids

Even the “good” kids—bound for college, upwardly mobile—sometimes break the law. The difference? They don’t have much to fear. A professor of race and social movements reflects on her teenage years and faces some uncomfortable realities.



Follow us


Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.

Canadian Kids Have a Serious Smoking Problem

Bootleg cigarette sales could be leading Canadian teens to more serious drugs, a recent study finds.

The Hidden Psychology of the Home Ref

That old myth of home field bias isn’t a myth at all; it’s a statistical fact.

The Big One

One in two United States senators and two in five House members who left office between 1998 and 2004 became lobbyists. November/December 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.