In his new book, the Nobel Prize-winning economist Joseph Stiglitz describes why he sees America as becoming the most unequal advanced country in the world.
Ten years ago, major oil and gas companies thought it was crazy to try to extract fossil fuels buried in shale rock deep below the ground. But a few oil and gas prospectors thought differently. In a new book, a Wall Street Journal reporter shows how these men risked their careers to develop a new drilling process known hydraulic fracturing or fracking. He chronicles the story of how a group of ambitious and headstrong drillers ignored the experts and dramatically transformed America’s energy production. In just a few years “the Frackers” made astonishing fortunes and triggered a global environmental outcry.
- Gregory Zuckerman reporter, Wall Street Journal, and author of "The Greatest Trade Ever."
Read An Excerpt
Reprinted from THE FRACKERS: The Outrageous Inside Story of the New Billionaire Wildcatters by Gregory Zuckerman with permission of Portfolio, a member of Penguin Group (USA) LLC, A Penguin Random House Company. Copyright (c) Gregory Zuckerman, 2013.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Ten years ago, American leaders worried that the country was running out of fossil fuels, but a handful of oil and gas prospectors knew what was about to change. In a new book a Wall Street reporter tells the story of how a few men transformed the world's energy supplies by experimenting with hydraulic fracturing or fracking.
MS. DIANE REHMThe book is titled "The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters." Author Gregory Zuckerman joins me here in the studio. And you're welcome to be part of the program and give us a call at 800-433-8850. Send us an email to firstname.lastname@example.org. Follow us on Facebook or send us a tweet. Welcome to you, Gregory. Thanks for being here.
MR. GREGORY ZUCKERMANGreat to be here.
REHMThank you. You know, until about 10 years ago, I had never even heard the word fracking. How long has this been going on?
ZUCKERMANYeah. Most people hadn't until just a few years ago. We've actually been fracking, which is just short for hydraulic fracturing, since the '50s, frankly, and around the country, Kansas and elsewhere. But only in the last few years has it really led to this resurgence, this real revolution in energy production in both oil and gas in our country, and it's transformed everything.
REHMHow come you got interested in it? You're writing about financial matters. What turned you toward fracking?
ZUCKERMANThat's a good question. So a few years ago I wrote a book about the financial crisis and the people that anticipated it and made billions and did quite well. And, frankly, right now, it's a very discouraging time both in the financial world, the political world, obviously a lot of divisiveness in Washington and in Wall Street. We're still digging out of the financial downturn.
ZUCKERMANAnd when you look at what we do better than the rest of the world, frankly, we are good at rapping, we're good at making drones, and we're good at fracking. We're much better than the rest of the world. And it's led to this remarkable resurgence that's going to change everything. So it occurred to me that the most important business topic right now, but also for the next five to 10 years, is this fracking revolution. So I thought I'd learn how it all happened.
REHMTell me about George Mitchell.
ZUCKERMANSo George Mitchell is the father of all this. He's a guy from Texas and independent. His father was an immigrant, a goatherd from Greece. There are actually a number of immigrants in my story, in my book. It's actually quite an American story in that regard. So George Mitchell ran a midsized energy company, natural gas company, in Texas.
ZUCKERMANAnd it was doing pretty well. He wasn't any kind of billionaire or anything. And he realized -- it was pretty obvious -- that they were running out of natural gas. Around 1980 or so, they figured that out, and they had to supply about 10 percent of all the gas coming to Chicago and some other markets. So they were done if they couldn't figure out how to get more gas.
ZUCKERMANAnd, frankly, they didn't have options like Exxon and Chevron to go offshore and to Africa and Asia. All they could -- all they had was some area, some acreage in Texas, and in this acreage was a layer of shale, which is a type of rock, a really compressed challenging kind of rock, which all the experts said, don't even try to tap it.
ZUCKERMANBut Mitchell had to. He didn't have any other choices. His company was going to go under. And by the late '90s, they still couldn't figure it out. They spent about 18 years, and they finally had an aha moment. And, frankly, Mitchell was about 80 years of age. And it was really guys in the field, who I write about -- guy named Nick Steinsberger -- and they did remarkable innovation. And, frankly, the rest of the world is catching up to what they've done.
REHMSo George Mitchell actually thought that with that kind of breaking of the shale that there would be something that would come out a bit, and he believed when nobody else did.
ZUCKERMANThat's exactly right. So all the experts teach that this shale layer -- and shale's just a type of rock, and it's way down below, as much as 14,000 feet below the surface. All the experts said this is called source rock. In other words, it's the source for oil and gas that eventually moves higher up to the surface, close to the surface.
ZUCKERMANAnd people have thought, well, you can't really access this source rock. We all know that there's a lot of oil and gas there, but it's just too far down, too expensive, too difficult to figure out how to fracture it. And that's what fracking is basically, just fracturing the rock with a lot of water and some chemicals -- and dangerous chemicals -- we can get into that -- and sand.
ZUCKERMANAnd Mitchell really didn't have a choice, so, yeah, he believed. But he also didn't have much of a choice. He was going to run out of money. And by the late '90s, he had cancer. His wife was getting sick. He was facing bankruptcy, frankly. And this guy Nick Steinsberger, who was going to get fired if he didn't figure it out, and they somehow figured out a way to fracture -- cause these little fractures, fissures in the earth, in the rock, allowing natural gas to come to the surface.
REHMSo how did he finally convince those first drillers to go down and begin the fracturing?
ZUCKERMANWell, he basically made them. He told them, guys, we have no choice. So we're striking out left to right, everywhere else. The only possible way we could save our company is to figure out how to get this natural gas from shale. And, frankly, his own heir apparent thought he was making a huge mistake. He campaigns behind Mitchell's back to tell the guy, stop working on the shale. It's a waste of time.
ZUCKERMANYeah. He really undermined him. And Mitchell by then, frankly, was hands-off kind of guy. He was about 80 years of age. And he was encouraging his troops from his office in Houston, but he wasn't really there with them. It was really a few guys -- unheralded guys who I write about -- and, frankly, they never really received much of a reward or recognition I give them in my book. I tell their story a little bit. But it's a real sort of American story of innovation where we're still innovating. And these guys figured out something that all the experts said they couldn't do.
REHMHow did they figure it out?
ZUCKERMANWell, it was a lot of trial and error, but it was a lot of luck, too. So what happened was one day they, by accident, pumped in -- and what you do is, again, you put a lot of pressure. You use water and a lot of -- and some chemicals, about 90 percent or so -- back then they were using of water. And the rest was sand and chemicals.
ZUCKERMANAnd you shoot that. You pummel the rock, and you create these little -- you hope to create these little fissures, these little fractures, that allow energy to escape -- oil and gas to escape. And basically one day they made a mistake -- or their contractor made a mistake, and they used way too much water in the mix. And all -- and somehow -- and Nick Steinsberger noticed that, well, yeah, it was a mistake here, but it was still producing pretty good amount of gas.
ZUCKERMANAnd yet we were using all this water. In other words, 99.5 percent of the mixture of the cocktail was water. And Steinsberger said, wait, hold on a second. It's actually producing pretty good amount of gas. And all the experts and the contractors and the specialists said, you can't use so much water. Shale is sort of like clay. You can't put too much water. It's going to muck it up.
ZUCKERMANAnd yet Steinsberger played with it. There was a lot of trial or error at that point, and they tweaked it. And they kept working at it. And they somehow found this way to get a lot of natural gas to flow to the surface in this one are called the Barnett Shale in Texas. And at the time, people said, well, okay, George, and you and your guys figured out how to do it in Texas in this one spot.
ZUCKERMANAnd, yeah, George was able to sell his company for about $2 billion. And he put a lot of money actually into alternative energy, and he's a big believer -- he was until he passed away recently. He has a foundation. And his children are very, you know, focused on alternative energy. And we could talk about that a little bit.
ZUCKERMANBut at the time, experts said, okay, well -- they granted him, yeah, you figured it out in that one spot in Texas. But there's no way we can tap shale elsewhere in the country or elsewhere around the world. And then it was sort of a baton, like a race, and others took the baton and said, let's go figure it out in other places.
REHMWell, what's amazing to me is that you identify George Mitchell as an environmentalist, as somebody who really cared about the environment. But yet said we're going to use all this water. The other guys figured it out. We're going to use all this water. We're going to use these chemicals. He ends up a billionaire giving a great deal of money to environmental causes. Did he truly understand the extent that the environmental impact the process was going to have?
ZUCKERMANThat's a good question. I don't think he did. And I don't think a lot of the pioneers did. Quite frankly, a lot of the places where we traditionally produce oil and gas in this country are places that are not very densely populated, Oklahoma and Texas and such. And they're very supportive of a drilling, generally speaking.
ZUCKERMANSo they didn't -- they were not aware of any kind of backlash. They weren't wary of any kind of backlash. And they also didn't think they were doing anything wrong. You know, one of the things I found from doing research on the book is, frankly, I came at it with a little bit of a clichéd view of these guys. I thought they were sort of cigar-chomping Houston executives, polluting their way to billions and laughing about it.
ZUCKERMANAnd the more I met with them -- and they're not angels. They make mistakes left and right. We'll get into that. But they're also much more focused on these kind of environmental issues than I would have expected. A lot of them spend a lot of time outdoors. They're geologists. They like rock. They deal with rock. They have ranches. They hunt. They fish.
ZUCKERMANSo they, in their mind, didn't set out to cause harm. They -- again, we've been fracking since the '50s, and there hadn't been much harm. But there has been harm caused, unfortunately, over the past few years. And partly it's because we moved into some newer areas, like in Pennsylvania, where they weren't as aware of the geology, hadn't been much drilling in recent years, and they made mistakes left and right, unfortunately.
REHMAnd what happened after Texas was this big race then to find other areas in the country where the same process might be used?
ZUCKERMANExactly. So there were a few people that, at that point, said, you know what, maybe George Mitchell's on to something. Maybe his guys have figured out how to tap this shale. And, again, shale was always like this fool's gold. In energy business, everyone knew there was a lot of oil and gas there. But obviously we can't get it.
ZUCKERMANWell, hold on a second. After Mitchell and his guys in the late '90s figured it out, people said, you know what, let's try to figure it out elsewhere, in Pennsylvania, in North Dakota. So there's a guy I write about named Harold Hamm who was one of the biggest believers that we could actually get a lot of oil from shale. Natural gas is hard enough, and oil's even harder to connect the pores and to get that.
ZUCKERMANAnd I could talk about him. He's a fascinating guy in that he grew up dirt poor, really had nothing growing up, and he couldn't even go to school.
REHMAnd the book is titled "The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters." Gregory Zuckerman of the Wall Street Journal is the author.
REHMAnd welcome back. In his new book, "The Frackers," Gregory Zuckerman, an award-winning Wall Street Journal reporter and author of "The Greatest Trade Ever," writes about those pioneers who began the fracking industry, getting oil and gas from shale. There are so many people in this book. Who are the ones that you think, in addition to George Mitchell, really moved this process forward?
ZUCKERMANYeah. It is a story of interesting mavericks. They're not necessarily good or bad people. I'm sort of drawn to that as a writer. I'm drawn to stories like this one, which is sort of grey. You have grey characters and grey themes. There are a lot of positives from this revolution and a lot of negatives.
REHMHere is an email from Mitch: "Are the frackers living up to the contracts with the people on whose land they are drilling?"
ZUCKERMANOften, they are. Sometimes they're not. Things have gotten better. There is documentation to support that, especially now that the experts, the Exxons of the world, have raced back to America and realized that guys like Aubrey McClendon and Harold Hamm and some of the other people I write about were right in that you could tap a lot of oil, gas from this shale layer.
ZUCKERMANAll the experts are coming back, and the Exxons. And they are doing things a little bit better. So have they lived up to it? I don't know how you define that, frankly. Spilling and leaking and that kind of thing may not be living up to your end of the bargain, but they've also done a lot of great for this country as well -- and for homeowners. I mean, I've met all kinds of farm owners who would have lost their properties and their farms and their children where they were going to move away from their small towns in North Dakota and other places -- Pennsylvania.
ZUCKERMANBecause they were just -- there's no commerce. There's no opportunity for them. There were a lot of small town America has been helped because they found oil, gas in some of these places. So, again, I've traveled the country and fascinating places, North Dakota, Oklahoma, Texas, and there's a real rebirth in a lot of small towns because of this energy resurgence. So with the bad comes good.
REHMWhat about water? You talked about the amounts of water required to carry out this process. There are many communities worried about how much water it takes and also whether their own underground water is being affected.
ZUCKERMANSo there are two issues with water. One is how much water we use for each well, and it's about 5 million gallons per well in places like the Marcellus. It's a lot of water. We also, as a country, need to think about how much water we use. Is this a priority? You know, we use a lot of water for things like golf courses as well.
ZUCKERMANI would argue maybe that's not a priority. So water usage is a big deal. They're doing a better job, though, of recycling. And I think they'll continue to do so, so there will be less dependence on all this fresh water. But the bigger issue is whether the water supplies are going to be infected by these chemicals. And some of these chemicals are really dangerous. They're acids, detergents, things you don't want to be drinking.
ZUCKERMANAnd the concern is that we're going to see cases where the chemicals are pumped in in this fracking process are going to rise up from this layer that's about 14,000 feet -- as much as 14,000 feet below the surface to the aquifers, which can be 400 or so feet. Now, if you talk to scientists, you talk to objective people, they say that's really, really unlikely.
ZUCKERMANBut it's possible. It's unlikely, though. I'm not as worried about that. I'm more worried, frankly, about things like spills and casing mistakes. And one in 10 wells have seen casing mistakes where the cement...
REHMWhat does that mean, casing mistake?
ZUCKERMANI'm sorry. The cement jobs in which they put the -- basically, what you do is you drill down vertically. Then you turn the drill bit 90 degrees, and you go horizontally. And then you start fracturing the rock with those chemicals and little bit of chemicals, a lot of water and such, and the casing is what protects the well bore.
ZUCKERMANAnd it protects -- the cement protects it from getting out, protects the chemicals and the methane from getting into the water system. And in about one in 10 times, there are casing mistakes. Now, it's not say they can't be addressed. If you talk to environmentalists like the EDF, Environmental Defense Funds, they argue that fracking can be done safely, but it often isn't.
ZUCKERMANAnd the industry dwells on the fact that it can be done safely. And the activists dwell on the fact that it often isn't. And I'm sort of in the middle, and I get flak from both sides, frankly, because I think we can put pressure on the producers to improve the way they do it and to do it properly. But we're not there yet.
REHMNow, have you visited with some of the people who argue that their property has been negatively affected?
ZUCKERMANOh, definitely. So if you drive around the Dimock area, which is sort of Ground Zero in the debate, in Pennsylvania -- and I met homeowners who show me their water. And it doesn't look too good. And, frankly, there are studies that show that about 40 percent of the homes before fracking have issues with their water.
ZUCKERMANSo, you know, as an objective reporter, as I am, you have to ask those kind of questions, what was it like before? But, frankly, it's disturbing. It's really disturbing. And, you know, it's a very grey story because it's not so clear to say, well, if you're an environmentalist, you don't like fracking because fracking has allowed us to shift away from coal.
ZUCKERMANAnd if you care about global warming, as I do, or worry about global warming, the only way we can combat global warming as a people is to get China to frack, quite frankly, and get away from coal. And we've already reduced our carbon dioxide emissions in our country by about 12 percent since 2005, which is really positive.
ZUCKERMANBut there's the negative, too. There are the spills, and there's the leakage. And there are the concerns about long-term effects. Quite frankly, no studies really show that fracking chemicals get into the water system and have harmed -- they're one-off situations where there are well issues. But I'm -- who knows about the long term? We've never fracked like we have in the last few years.
REHMNow, I must say straightforwardly here that my husband and I -- our family owns property in the Marcellus Shale. And we have not allowed fracking on our property, even though all of the farms around us have indeed moved ahead with fracking. Now, the question of water endemic, the question of property values endemic, have been affected.
ZUCKERMANYeah. Yeah, they have been. And there have been -- see, Dimock was early in the process. And I'm not any kind of a politician for the industry, but objective people say they have improved things since. They made early mistakes in Dimock.
ZUCKERMANAnd it helped that Exxon and those kinds of people are doing it as opposed to sort of the independents that were still learning how to do it. You know, that part of the state hadn't seen much drilling in recent years. And, frankly, the operators weren't that familiar with the geology early on, and they learned their lessons. But, listen, there's no defense for some of that stuff. Again, it's a mixed bag. You've got jobs created. You've got people staying in their homes, and you've also had people been damaged with mistakes and leaks and surface spills, things like that.
REHMYou know, you mentioned Aubrey McClendon, and you write that, by 2008, he was a billionaire. But then his fortune slipped through his fingers.
ZUCKERMANThat's exactly right. So Aubrey McClendon is a key part of my book and a key part of this revolution. He ran a company called Chesapeake Energy. He started off with about $50,000 only, and he built it along with a colleague, Tom Ward, into the second largest producer of natural gas in the country. So we have him to thank -- or to blame, in some ways, for this resurgence and the fact that we're all paying about a half or a third of what people are paying for natural gas in places like Asia and Europe.
ZUCKERMANAnd McClendon really believed in this revolution. And he came from some money. He wasn't poor. But Tom Ward, his colleague, came from a much more troubled background. And his father was an alcoholic, and his grandfather was an alcoholic. So they really had remarkable ambitions -- a very American story both for good and for bad -- the outsized confidence, outsized ambitions.
ZUCKERMANAnd they said, we're going to go out and lease up and down the country. And they leased enough land. Their company controlled a size of more than three times the size of New Jersey at one point. And by 2008, as you mentioned, McClendon was worth about $3 billion. And most of it was in his own stock, and he borrowed and borrowed and bought more. And then he blew it, frankly, because the crisis came.
ZUCKERMANAnd I write about how he had to beg his lenders not to give him a margin call. And then he didn't realize how much production other people were going to have. So in the end, some of the frackers that I write about, they're the ones who suffer the most. They got kicked out of their own companies and ended up embarrassed in some ways while the rest of the country has had both benefits and some risks as well.
REHMAnd one of the financial companies that I know you wrote about earlier, including Enron, figure into this story as well. You write about Mark Papa and how he built a $43 billion company from the discards of Enron. Tell us about that.
ZUCKERMANSure. One thing I found in this research is some of the people, the pioneers, the people that have done quite well for themselves, and potentially for the country as well, are not people that most people know anything about. I mean, Mark Papa runs a company called EOG Resources. They're bigger than Southwest Airlines, Hershey, and (word?) combined.
ZUCKERMANAnd yet no one's really heard of them. And they were the ones who -- basically Mark Papa ran his company. He was -- they were kicked out of Enron. Enron didn't want anything to do with them 'cause Enron was just trading. And God forbid that he should actually go and look for some oil and gas, which is what Mark Papa and his group are doing.
ZUCKERMANSo they kicked them out as -- EOG was Enron Oil and Gas. And for a while, no one really cared much about them. They had some property in different places. And they were natural gas producers. But Mark Papa was really early in realizing that a glut of gas was coming to the country. And, frankly, all his deputies were high-fiving each other, and they were celebrating because they were producing a lot of gas.
ZUCKERMANAnd Papa said, well, hold on a second, guys. If we are producing all this gas, maybe our competitors are going to be as well. And then we're going to have a glut, and it's going to send prices collapsing. And then we're done. We're in trouble. So they turned on a dime. And I find it kind of impressive that they were able to shift so quickly.
ZUCKERMANAnd they said, let's go find oil. And they are pioneers in this area called the Eagle Ford, which is helping to lead us to energy security, if not independence, 'cause we're producing so much oil in this country suddenly. It's thanks to people like Mark Papa.
REHMDo you think people like Mark Papa are also worried about the environmental impact?
ZUCKERMANAre they worried? To some extent, they are. Are they as worried as they could be?
ZUCKERMANNo. No, I -- again, I had that stereotypical view of them. They're not callous. And they do have concerns about the environment. They also realize that we've fracking since the '50s, and there aren't that many documented cases where there have been ills brought, where there's been damage. But there have been enough such that it is reason for concern.
ZUCKERMANFrankly, I'm a big believer that we as a country are going to be producing oil gas from fracking. We're sitting on some of the biggest deposits in the world. We're still digging out of a deep downturn -- economic downturn, the deepest since the Depression. And for us to still send all this money to countries that we don't really love so much -- Venezuela, Saudi Arabia, et cetera -- is a little bit unrealistic.
ZUCKERMANSo instead of saying, fracking's poison and we should stop it, and instead of saying, drill, baby, drill, I'm sort of a centrist. I say, let's put pressure on the producers to improve the way they do it because if we don't do that, they're going to keep going the way they're going. And there's going to be danger.
REHMAnd you're listening to "The Diane Rehm Show." I think lots of people wonder about the lobbying that is in place for the oil and gas industries, whereas not enough lobbying is funded for alternative means of energy that could indeed reduce these environmental concerns.
ZUCKERMANBig oil has a big lobby. Some of the guys I write about, frankly, didn't know anything about lobbying. They were too small. Some of these pioneers didn't really know anything about how to lobby. And, frankly, it hurt them. Their public relations is horrible. Everyone hates fracking as a result. So I would argue that lobbying doesn't make much of a difference.
ZUCKERMANAnd in terms of alternatives -- so call me naïve, but we're making a lot of progress in this country on solar and wind and some other things. And I take the stance that -- I take the hopeful stance -- some would call it naive -- that this will be a transition fuel. And this buys us time, so we can make progress in things like electric cars, self-driving cars. We can reduce our footprint.
ZUCKERMANAnd it's happening. It's all really happening. Solar is getting better and a bigger part of the equation. Maybe it's not happening as fast enough. And my fear -- that's the fear -- that it's going to distract us from improvements in solar and wind and things like that. But my hope is that it buys us time and allows us to focus on that. I mean, frankly, lower class people benefit the most from this revolution because they're enjoying their -- they can light their homes and cool their homes. Natural gas is much cheaper than it would otherwise be.
REHMAll right. Let's go to Jane in Pittsburgh, Pa. Hi, Jane.
JANEHello. Southwestern Pennsylvania, yes, is being flattened by this juggernaut, this steamroller. And what is most galling, I think, and something that we should see clearly is that talk of all of this is a failure of our national land and foreign policy that farmers think they -- are pressured to cash in on this. But it's -- they are also part of -- they are deceived by these frackers who themselves are self-deceived. That is, they are deluded when they say that they are environmentally sensitive and these chemicals are so far down in the aquifers.
JANELet's -- how stupid do they think we are? There's a straw in the ground that, over time, has to have -- be maintained. They're not bonded for any of that. And I would just like to say that what's most galling is the greenwash that they participate in in supporting our botanical gardens, contributing to causes. They are supposedly environmentally friendly when they maybe self-deceived these geologists about the outdoors, but they're not taking care.
REHMAll right, Jane.
JANEAnd I resent it. I -- steam comes out of my ears when I hear about this.
REHMOkay. Thanks for your call.
ZUCKERMANYou're not the only one. Listen, there have been a lot of documented mistakes. There are 161 examples in Pennsylvania homes and farms and churches of damage to water supplies between 2008 and 2012. But things are getting better, according to that same data. So that data since then has gotten better in terms of complaints and such.
ZUCKERMANIn terms of the farmers, I mean, talk about a big lobby, a strong lobby. They have a quite strong lobby as well. So I don't think the farmers -- I don't know how you characterize them. But they're just trying to keep their homes and keep their farms. And I'm not sure we want to be, as a nation, allocating more resources there.
ZUCKERMANA lot of them are thankful. And I've talked to them, and a lot of them don't think there's much of a footprint in their area and have it been much damage. So it's a real mixed -- I mean, you go to these towns. Within the same town, you have people that love fracking and people that hate fracking.
ZUCKERMANAnd, frankly, it's sad for me because you travel and you talk to them, and it's caused a lot of divisiveness within small communities. And as an American, it's sad to see.
REHMAnd it really does divide communities.
ZUCKERMANIt really does. And some people actually got great deals because they leased at the right time, and other people got really bad deals when they leased to the energy companies. That's sort of the free market, and that's unfortunate. But it causes a lot of resentment within these towns.
REHMGregory Zuckerman, his new book is titled "The Frackers." And when we come back, we'll take more of your calls, questions, comments. I look forward to speaking with you.
REHMAnd welcome back. Gregory Zuckerman of the Wall Street Journal has written a new book. He calls it "The Outrageous Inside Story of the New Billionaire Wildcatters." His book is titled "The Frackers." And here's an email from Laurel -- no, from Laurel, Md. Heather writes -- and apparently there are several emails like this -- "Please address the fact that the chemicals used in fracking are not subject to the Clean Water Act. And why are we using money toward a temporary energy solution when we could be using it for renewable energy?" Take that first point first.
ZUCKERMANSure. So there is a real concern, and there should be. Frankly, the companies haven't been very transparent about what's in these chemical mixes. And, again, it's a small percentage of what they're pumping in there, but it adds up. And it took them a while to realize there was a concern out there. And they would argue -- a company would argue that, hey, this is our special sauce.
ZUCKERMANThis is how we make money. We put the concoction or the combination of sand and detergent and water together in the right amounts, and this is how we make our living. So we're not going to tell our competitors. But there's been such concern -- and there should be concern that now they are much more transparent. But they're not where they should be. So there are exceptions. In I think about 20 states, they have to reveal exactly what's in the chemical composition.
REHMLet me follow up with that. Luke in Caledonia, Mich. wants to know what would happen if the cocktail for fracking removed all the harmful chemicals, keeping mainly just the H2O. Why do you have to have those chemicals?
ZUCKERMANThat's a really good question. You talk to geologists and engineers, and they say that you still need some of that stuff to be able to cause these fractures. They've tried everything, frankly. They've tried -- and they're going to keep trying with it. They realize there's this outcry. They're not oblivious, and they are playing with and trying to reduce some of the harmful stuff.
ZUCKERMANSo I would argue that they seem, to me, till you talk to them, they still need to use some of this stuff. They're aware of it. They're getting a little better. They're getting better at other things, too, like recycling. And reports of contamination have gone down. But it is very troubling that there are exceptions still where they can avoid revealing exactly what the chemical composition is in the cocktail they use.
REHMAnd Virginia writes, "CO2 is not the only driver of climate change. What about methane from fracking?"
ZUCKERMANSo methane is the concern. It's been a concern for a while because the only reason -- one of the only reasons why natural gas is better than coal is it's only if we don't release too much methane with the production of natural gas with fracking. And there is methane that's released. The latest studies suggest that there isn't enough methane released to make it troublesome, to make it...
REHMWho did the study?
ZUCKERMANThat was an EPS study, and, frankly, they're -- the EPA is working on their own study to bring some industry people and outsiders who have done a study. But the EPA's working on their own. I would argue that they haven't done enough job. I don't know why, frankly, the EPA hasn't done a good enough job of tracing methane emissions. But they are supposedly working on a new study. But the sense is that it's still not enough to make it worse than coal. It's much better than coal. And then there's mercury and other kind of things in coal that we don't like either.
REHMAll right. To John in Tulsa, Okla. Hi, there, John.
JOHNHi, Diane and Gregory. Thanks for taking my call.
JOHNI have been in Tulsa -- I was born in Tulsa and raised in rural Oklahoma in Okemah, home of Woody Guthrie. And we never -- growing up the whole time, I never really felt an earthquake my whole life. I moved away to California. There were several earthquakes. We thought we were coming back to -- away from earthquake lands when we got back to Tulsa. And we've had lots of earthquakes in Oklahoma and in the last recent years. And I'm wondering, is there any connection between fracking and earthquakes?
ZUCKERMANThat's a concern a lot of people have. If you talk to scientists and others, they're not concerned so much about that issue. They're more concerned about some others. The issue, generally speaking, is that wastewater comes back after you've processed the refines, the natural gas or the oil, and shipped it off to market.
ZUCKERMANAfter you've done the fracking, wastewater comes back to the service. They call it flowback water. And they have to do something with it. And often they inject it deep in the ground. And the injection, in some parts of the country, has caused kind of small tremors. And there is -- I know there's some concern in parts of Oklahoma as well.
ZUCKERMANThe objective experts will say, we can figure out a way to deal with that. We'll inject it in better places. We'll do it somewhere else. We'll figure out -- we'll do seismic tests before. And there should be more testing before they re-inject it. But tremors aren't my biggest concern.
REHMWell, you did have a group of tremors up there in West Virginia. We had a small earthquake here in Washington, D.C. affecting, as you know, the Washington Monument, the National Cathedral, costing millions of dollars for repairs.
ZUCKERMANRight. But there's no evidence that that's connected to fracking.
REHMWell, some scientists did indeed speculate that -- I mean, you cannot provide proof, of course. But there is speculation that some of these earthquakes in really odd places -- and I've never felt an earthquake in my life.
REHMI was in an elevator when the earthquake hit and...
JOHNAm I still with you guys, Diane? Am I here still in Tulsa?
JOHNYou guys still with me? You know, that's what I get. We're talking about way, way, way down under the aquifers and cracking up the substrata of the earth. And how can we map that effectively? We're having real experiences shaking up our, you know, bubble up here. How can we just say, well, based on our knowledge of fracking -- we haven't had this like this before, and it's such a...
REHMSee, I think that's the issue that people are saying you take all this water and chemicals going down, and then you say, well, we can't find a connection between that and earthquakes. But, you know, two and two don't ordinarily make five, but you've got to think about it.
ZUCKERMANThere's the possibility. I'm an objective reporter. So I just go with what the scientists and people that aren't on either side of this story. I try to find those people in the middle, and maybe I'm one of the last interests out there.
REHMSo you don't come to any conclusions on your own.
ZUCKERMANOh, I do come to conclusions. That has been...
ZUCKERMANI think it's a net-net positive for the country. I think that there are risks, and there are dangers. And we have to address them. But considering the jobs and considering the fact that we're moving towards energy independence, we don't depend on OPEC anymore, and we've got all kinds of improvements in carbon dioxide emissions and greenhouse effects, I think it's a net-net positive.
ZUCKERMANI also think that it's almost inevitable. Right now, 90 percent of natural gas wells are fracked. So if we're not going to frack, that's okay. But we have to choose something else. Solar and wind aren't there yet. We could do nuclear. I'm a fan of nuclear. But a lot of the same people that don't like fracking don't like nuclear. Quite frankly, it's a little bit of a rich man's issue in some ways because poor people, they just want to turn on their lights and drive in their cars and not pay so much.
ZUCKERMANAnd a lot of them are unemployed. We've got unemployment much too high now. So it's a luxury to be able to be concerned about this. It's not to say -- see, my whole recommendation is to put pressure on the producers. They're not going to put the genie back in the bottle. Let's make sure they do a much better job of what they're doing right now and...
ZUCKERMAN...call me centrist. I don't know.
REHMTo Crestwood, Ky., Sean, you've got concerns.
SEANYes. My biggest is -- and I'd like him to discuss (unintelligible) eminent domain. Most of the states where the fracking is going has forced pooling laws. For example, in Kentucky here, if two-thirds of your surrounding landowners sign on, they are permitted to extract the mineral wealth, and the royalties they pay the landowners who will not sign are reduced by double.
SEANAnd I've read the law of the cost of the company. So the last third roughly in our state of landowners who don't sign, they've got a gun to their head. And we also have -- they're now using eminent domain to force pipelines across the state, and the legal newsletters from the industry are telling people to be very aggressive and not negotiate and use eminent domain when possible if you can't get "a good price," the cheapest possible price.
REHMAnd, you see, that's what people are concerned about.
ZUCKERMANYes. And that's a real concern.
ZUCKERMANIf you don't want it in your backyard, sometimes you're forced to. And it's really unfortunate. It's frustrating for people. I talked to people that have leased their land just because they realized that they have no real choice in the matter. So they might as well do it and make some money off of their homes for their family, but they'd rather not. It's an unfortunate -- we've got eminent domain which causes unfortunate issues, all kinds of areas. But it comes down -- it also involves fracking.
ZUCKERMANThat said, I'm a real big believer that if communities or states don't want it -- like, New York State, they've decided, at least so far, to ban it. Good for them. More power to them. And Colorado, some communities, too. So you can get enough of a political impact, put some pressure on the politicians. New York has really kind of put off its decision for years.
ZUCKERMANBut, you know, they were able to forestall fracking in the state. And, you know, it's cost jobs, and it's caused people to lost their homes. And instead they're shifting to things like gambling, which I'm not a gaming -- I'm not a big fan of. But more power to them if that's the decision of the populace.
REHMAll right. To Nancy in Clarkston, Mich. Hi there.
NANCYHi, Diane. I've been a longtime listener.
NANCYI always tell everyone I'm getting my master's degree courtesy of NPR.
REHMOh, I'm so glad.
NANCYI agree with so many of your other callers that, you know, we just treat beautiful little planet like a toilet by pumping every conceivable poison into it that we can. And I don't think in -- we've had many examples that companies cannot be trusted. They will take the path that is cheapest for them to produce a product. We've seen it happen in the Gulf with the Gulf spills. Following the spills, now they've decided they have come up with new ways to do it.
NANCYWell, that was a terrible lesson to have to pay. Also, having worked for a very large corporation, I know that they -- these companies have panels of lawyers who assess risk and -- versus the cost to install better methods to what they are doing. So they very often opt to just deal with the risk and the lawsuits that follow.
REHMWhat do you think, Gregory?
ZUCKERMANI am aware of the concerns, and they're legitimate concerns. Again, fracking itself was never proved to kind of be dangerous in and of itself, but that doesn't mean that there haven't been spills and casing mistakes, et cetera. I guess my response would be, okay, then, therefore, how are we going to light our homes and heat our homes and put out -- and cool our homes, et cetera?
ZUCKERMANAgain, I'm all for nuclear if everybody else is. It doesn't seem like we as a nation want to embrace nuclear. And solar -- I want to give solar and wind a chance to provide it all for us. We're not there yet. So, unfortunately, we have to depend on natural gas right now. And, unfortunately, the only way to produce is through fracking.
REHMBut the question -- oh, why aren't we there yet with solar and wind?
ZUCKERMANSo it depends who you talk to. You could make the argument that this is distracting us. This resurgence in natural gas and oil production is distracting us. And other people would argue -- and they're not necessarily part of the industry. They would argue that breakthroughs take time. When it comes to any kind of innovation, again, the Mitchell guys spent 18 years figuring this out.
ZUCKERMANThere are people innovating right now when it comes to solar, when it comes to wind, electric cars, et cetera. We're making progress. We are making progress, and we are gradually going to shift. And we're going to get to the point, I think. And you talk -- where we could rely on it. I mean, you talk to people in the industry. That's a gold mine for them. They really want to make a lot of money and fame and fortune helping us become reliant on alternative energies. But they say, we're just not there yet, Greg. Give us some time. And this is allowing us to get there.
REHMAnd you're listening to "The Diane Rehm Show." Let's go now to Arlington, Texas. Ed is on the line. Ed, go right ahead.
EDHi, Diane. Maybe some of these other technologies, these alternative technologies might be more economically viable if the current technologies paid their full share of the burden of their use. Maybe if the oil industry bore a larger fair of the defense budget, then gasoline and petroleum fuel would be higher priced and would make solar energy, wind energy more economical. That said, that's not really the reason why I called.
EDThe reason why I called is I live in the heart of the Barnett Shale. I saw these wells coming across the River Valley about 10 years ago. And I want to know whose bright idea it was to allow fracking in an urban area. There's a whole host of problems that relate to really the incompatibility of fracking in urban areas.
EDIt hasn't been discussed on this program yet. There's a large volume of increased volume of truck traffic, and the dust and the mud. The dust and the dry weather, the mud and the rainy weather that they leave the damage to the roadways, the inadequate fees that they pay to cover that. There's just a general blight on the urban area from these drilling pads that have to put in their several acres in size, and they look like basically junkyards...
ZUCKERMANSo I'll address your first point. I'm a big fan of putting a tax on oil and gas and using that money to fund research on alternative energy. That's a great idea. I'm not sure we -- still kind of wobbling after the economic downturn -- can handle such a tax, but we should be thinking about it. I'm a big fan of that. In terms of your second question, in terms of the blight, yeah, listen, I've traveled the country. And it's noisy. It's dirty. I wouldn't necessarily want it in my backyard.
ZUCKERMANBut, frankly, you said, whose brilliant idea it was? Well, it was the fact that we were running out of natural gas in this country. I mean, a few years ago, we were scared to death about shipping all this money to countries that support terrorism, other places, and we'd have to build big terminals to import natural gas from these countries into this country. And we were running out of natural gas. We tried to figure out -- and that's where the gas is sitting...
REHMBut now haven't we reached a point where we've got so much, we've begun exporting?
ZUCKERMANWe will be exporting. Yeah, I agree. It's changed dramatically. That's why I think we shouldn't allow drilling in parks and in public lands. You know, the industry pushes for that. I think that's really misguided. We're producing so much oil and gas right now we don't need to. Should we cut back on what we're doing? I guess we could, but then natural gas prices would be much higher. If we can afford it as a nation, I would rather just kind of tax it like the earlier caller had suggested, and use that money to help fund research on solar and wind and such.
REHMGregory Zuckerman, he tells the outrageous inside story of the new billionaire wildcatters in his new book. It's titled "The Frackers." And I'm sure, Gregory, this conversation will continue as all these questions about fracking go on? We're yet to hear from the EPA on how well this is going. Thanks for being here.
ZUCKERMANOh, great to be here.
REHMAnd thanks for listening, all. I'm Diane Rehm.
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