Scholars, statesmen tie energy policy to economic growth

By Kevin Palmer | For Watchdog.org

Most debate over hydraulic fracturing focuses on the localized costs and benefits of natural gas extraction, but at least one think tank is looking at the bigger energy picture.

With more than 2.5 trillion cubic feet of natural gas within America’s borders ― much of it under federal land ― scholars at the nonpartisan Gatestone Institute see fracking as a viable avenue for reducing the national debt.

Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and a featured speaker at the energy-focused symposium hosted by Gatestone on Tuesday in New York, conceded that fracking was not a substitute for conventional debt-reduction policies, like entitlement reform. But, she argued, energy development is both politically viable and a step in the right direction.

“It’s harder politically to fix the entitlement problem than to develop energy,” Furchtgott-Roth said. “We can use natural gas to attract businesses to America, to help raise our GDP growth from 2 percent to 4 percent. At 4 percent, we would be in a much better position to deal with our problems.”

Gross domestic product growth is a measure of the strength of the American economy. In the first quarter of 2014, American GDP growth was 0.1 percent. Only twice since 2006 has the American GDP grown by 4 percent or more during a quarter, a figure that lends support to Furchtgott-Roth’s argument that economic stagnation is preventing the federal government from paying down its $17.4 trillion in debt.

“Economists can call for growth, but it doesn’t always come,” she said. “We have a practically unlimited supply of natural gas — so much that we’re flaring a third of what we drill in North Dakota — and we need to use it to attract business investment.”

Furchtgott-Roth cited the Texas Permanent School Fund as a model of how governments can raise revenue, balance budgets and pay obligations through energy development. The TPSF, which funds public education in the state, has an endowment of more than $30 billion. According to the Texas General Land Office, the TPSF’s primary source of revenue is leases of state-owned land for oil and gas development, which have generated more than $11 billion for the fund.

Furchtgott-Roth named Alaska, New Mexico and North Dakota as other states that have raised endowments of more than $1 billion from energy-related land leases.

“Even Norway has built an $898 billion endowment, largely through energy development,” Furchtgott-Roth said. “And America is a lot bigger than Norway.”

Others appearing at the symposium included former Ambassador John Bolton, who serves as the chairman of the Gatestone Institute, retired U.S. Army Gen. David Petraeus, and former Director of Central Intelligence James Woolsey, each of whom spoke about the national security implications of energy policy.

Ann McElhinney, creator of the documentary film FrackNation, spoke on the microeconomic benefits of fracking.

McElhinney spoke of her experiences in Williston, N.D., which sits on the gas-rich Bakken formation and has seen rapid growth over the past eight years from the proliferation of fracking. She pointed to a formerly struggling small business that is now making $2.4 million per year selling clothing to gas rig workers as emblematic of the industry’s power to change local economies.

“If you were a hairdresser in Williston in 2008, you were watching tumbleweed roll by while your store collected dust. Now your business is booming and you’re hiring new people,” she said. “Fracking is about a lot of ordinary people having their lives transformed, and most of it is happening in economically depressed areas.”