3 Reasons Why New York's Fracking Ban Changes Everything

By Markets Fool.com

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Source: New Yorkers Against Fracking Facebook page.

New York is officially frack free. On Wednesday, Governor Andrew Cuomo announced that New York would ban hydraulic fracturing ("fracking") for good. Over the past few days, citizens and corporations have rejoiced in awe and erupted in anger. Here are three reasons why New York's fracking ban changes everything.

1) It's not about climate change
Hydraulic fracturing is an extraction technology that pulls oil and natural gas out of the ground by pushing a mix of water, sand, and chemicals into it. Fracking is the reason New York's (and most of our nation's) natural gas is accessible -- the Marcellus shale gas region accounts for 40% of U.S. shale gas production. But fracking gets a lot of flack. Despite natural gas' lower carbon dioxide emissions rate (about 30% less than oil and half that of coal), critics believe its carbon-intensive extraction process, as well as methane leakages during exploration and production, make natural gas as messy as any other fossil fuel.

But those claims are hard to quantify, and Governor Cuomo turned an environmental debate into a public health debate. The basis for banning fracking came in the form of a 184-page New York State Department of Health report. The paper focuses on air impacts on respiratory health, water contamination, potential earthquakes, and even boomtown community impacts like increased traffic and overstrained medical care. In the report's accompanying letter, Acting Commissioner of Health Dr. Howard Zucker notes:

[T]he overall weight of the evidence from the cumulative body of information contained in this Public Health Review demonstrates that there are significant uncertainties about the kinds of adverse health outcomes that may be associated with [fracking].

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2) Anti-frackers aren't only anarchists
Environmental activists aren't exactly mainstream -- but this latest ruling is evidence that Governor Cuomo and other politicians are increasingly interested in their message. The New York decision didn't happen overnight. Demonstrators protested at events around the states. Celebrities like Sean Lennon and Yoko Ono even sang their dissent.

In November, a Pew Research center survey found that more Americans oppose increased fracking (47%) than favor it (41%). Another poll conducted earlier this month found that just 30% of Americans surveyed believe expanding oil, coal, and natural gas is a more important priority than developing alternative energy sources.The political playing field is shifting, and politicians like Governor Cuomo are more willing than ever to enact change, accordingly.

3) It's not about the money
Over half of Maine's energy comes from renewables -- because its raging rivers run hydroelectric dams. Eighty-eight percent of Icelandic energy is renewable -- because the nation has huge geothermal assets underneath it. For New York, fracking natural gas represents an enormous energy and economic opportunity. But since the state has never received big tax boosts from natural gas, it won't miss them now. That's a major reason why natural gas companies in other states enjoy a "home court advantage" to environmental activists, but it won't help energy companies in the Empire State.Marcellus Region production has expanded fifteen-fold in the last four years, and government estimates put the area's total capacity at up to 489 trillion cubicfeet. New York alone holds around 141 trillion cubic feet -- enough to meet the state's current yearly consumption 128 times over.

Source: EIA.gov.

While 26 states have some local actions against fracking, New York is the first state with significant natural gas assets to ban fracking. The economics don't make sense -- but as Commissioner Zucker puts it, his findings don't have much to do with dollars:

I have considered all of the data and find significant questions and risks to public health which as of yet are unanswered. I think it would be reckless to proceed in New York until more authoritative research is done. I asked myself, "Would I let my family live in a community with fracking?" The answer is no. I therefore cannot recommend anyone else's family to live in such a community either.

The real economic losers may actually be New Englanders. Currently, the region relies on natural gas for about half its energy, compared to just 15% in 2000. New York's fracking ban reduces the probability for pipeline infrastructure expansions, further solidifying the 30% to 50% electricity rate hikes that some New England utilities are levying. As Northeast Utilitiesnoted in an announcement of a $3 billion pipeline partnership earlier this year, "New England wholesale electricity costs were nearly double compared to the previous year, largely due to pipeline constraints. These challenges will remain the same for the next several years, and our customers will feel the effects, if we do not act." New York paved the way for a frack-free future, but at the expense of its Northeast neighbors' electricity bills.

The flip side of fracking
New York has made a notable, perhaps even historical, affront to fracking. But here at The Motley Fool, we don't take anything for granted. While there are reasons to believe New York's fracking ban changes everything, there are also reasons it changes absolutely nothing. Fracking is an emotional debate, and keeping a level head is imperative to understanding its future.

The article 3 Reasons Why New York's Fracking Ban Changes Everything originally appeared on Fool.com.

Justin Loiseau has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.