In August, we wrote about our interview with New York Times senior energy reporter Matt Wald. In that interview, Wald discussed (among other things) the economics of cheap natural gas supplies, reminding us of an extremely important – but frequently forgotten – fact. Namely, Wald explained how the U.S. government had made “early, risky investments” which were used “to slash costs dramatically” for natural gas extraction and production.
Our own research, including emails, phone calls, and even FOIA requests to the Department of Energy’s (DOE’s) Fossil Energy office, reinforced and confirmed what Wald was saying. What we found was that DOE – as they themselves boast – “played a historic role in helping to advance the technology that is making shale gas production possible.” In other words, the fulcrum practice enabling the cheap gas revolution was not a result of the private sector acting on its own, but in fact was largely underwritten by taxpayers.
Over at Climate Progress, Stephen Lacey is out with an article that elaborates further on this important subject:
If we look at the history of how horizontal drilling techniques were commercialized, we find a strong base of government support through R&D, mapping techniques, cost-sharing programs, and billions of dollars in tax credits. The Breakthrough Institute wrote a report on this support last year showing how decades of federal support helped businesses pioneer and commercialize new, risky drilling techniques.
The Associated Press published a follow up story yesterday on the history of government support in shale gas. It illustrates the importance of federal assistance for new energy technologies. Along with establishing a tax credit for drillers in 1980 that amounted to $10 billion through 2002, the Department of Energy provided crucial technical assistance during times of failure.
The point here is not that government support for the natural gas industry is unique in any way, but that, as Stephen Lacey explains, “all energy technologies — nuclear, coal, oil, and gas — have received generous federal support in order to bring them to scale.” In fact, fossil fuels have received many times the taxpayer-funded support levels – subsidies, R&D, etc. – that clean energy has received over the years. Which is why calls to eliminate supposedly “wasteful” subsidies on clean energy, without calling for removal of the (much larger) subsidies and other assistance to the fossil fuel industry, are so hypocritical and absurd.