Fracking may have come into the Biden administration’s crosshairs, but opinions are mixed on what impact further restrictions and regulations would have on trucking, above and beyond normal market forces.
President Joe Biden wasted no time making good on his campaign promise to radically reshape how fossil fuels are collected, transported, and consumed. Among the first of a historic flurry of executive orders and actions he signed in the first two weeks of his term were the cancellation of the Keystone XL pipeline extension and initiating steps toward tougher regulations over oil and gas operations.
Proponents of the measure called it a bold first step in addressing climate change. Critics decried the loss of thousands of jobs (up to 12,000 attributed to Keystone alone by some estimates) and an economic hit that easily runs into billions of dollars. The negative impacts include both directly displaced workers and those in affiliated industries such as pipe manufacturing, storage, and, of course, transportation.
Pennsylvania-based Sage Corp. operates Sage Truck Driving Schools. President Chris Thropp, said he expects an immediate impact on the number of trucking jobs directly related to fracking.
“My general judgment, given that they will be banning fracking on federal land and making the whole regulatory process for oil and gas more difficult, is there are going to be fewer and fewer jobs for truck drivers,” he shared. “That’s a shame, because they really are good jobs.”
Thropp added that he feels “the kind of regulatory clamp” the administration could put on fossil fuels will limit the opportunities for drivers.
“We had people coming from out West who already knew they were going to go to North Dakota and West Texas, as they had jobs waiting for them and they were very high-paying jobs,” he continued.
New Jersey-based Carbon Express President and Owner Steve Rush agreed. However, he said, from his view, fracking was already on a downhill slide simply due to market forces.
“It’s a tough business to be in, and if you don’t understand it, you really shouldn’t be in it,” he said. “From the trucking perspective, for me at least, I didn’t go into it hog-wild because I knew it was a volatile industry. When I first got into it, I asked, ‘What’s the shelf life in this?’ and the gentleman I was dealing with from Calgary said, ‘You’ll probably have 10 or so years of drilling and you’ll have about 10 of fracking.’ And he wasn’t far off.”
That said, Rush added, government interference and regulation don’t help.
“What I’m being told is there’s more gas and more oil there. It disturbs me that [the administration] is doing things to the energy industry now, because we need those jobs,” he said.
As the oil industry licks its wounds over the actions, the fracking industry is bracing for what could be headed its way. Thus far, the directives from White House have been limited to fracking bans on federal land, according to Houston-based Rystad Energy’s Vice President Thomas Jacob.
“We spent a lot of time looking at that, and our conclusions were that in the immediate term you would just see activity and capital migrate to nonfederal lands,” he said. “There wouldn’t be a significant impact, at least in the U.S. in 2021. You wouldn’t see activity just dropping dead or dropping off significantly. You would see it be driven more by the oil price fundamentals, other than a regulatory response from the government.”
Jacob contends that in the near term, the aftershocks of COVID-19 will be far more disruptive to fracking production cycles and profitability than what comes out of the White House.
“All of the operators were in so much uncertainty that everyone went into their shells a little bit,” he said. “When COVID-19 hit and activity was plummeting, the supply chain companies … took a huge hit. We did see a lot of capacity coming off on the trucking side because of all of that.”
After that initial shock to the economy, industry experts were able to better evaluate the situation, Jacob noted.
“Once things cleared up a little bit and there was a more visibility into what was really happening, you saw a lot of frack fleets being put back to work in the third quarter,” he said. “The second quarter was the bottom with respect to completions activity. But then there was an uptick in activity — and when there is a sudden uptick in activity that is more than what people were expecting, there is a shortage of drivers and you see pricing on the trucking side going higher. That’s exactly where we’re at right now.”
Both Thropp and Rush said that whatever the future holds, the fate of fracking is far from the biggest issue facing the industry these days.
Rush said the driver shortage and controversial new measures regulating truck drivers present far more challenges to the health of the industry than who’s sitting in the White House.
“The average age of a driver today is 57. Two years ago it was 55; two years from now it will be 59,” he said. “Drivers aren’t getting any younger, and young people aren’t getting into this industry like they used to.”
Thropp added that it’s a short hop from the enhanced regulatory landscape governing fracking and other fossil fuel production to other regulations in the name of environmental quality. These, he said, will potentially be equally difficult for the industry to absorb.
“We’ve already seen the impact, particularly the emissions standards on trucks, because the diesel particulate filters (DPFs) have been very difficult to deal with,” he said. “Especially for students, where our trucks don’t run at highway speeds and temperatures, the DPF doesn’t really work. We have very expensive repairs as a result of that. That’s just one example of what’s occurring with environmental regulations that aren’t thought through very well.”
According to a report last November by the International Transport Forum (ITF), freight accounts for 7% of total global CO2 emissions, with trucking being the largest contributor. Given this statistic, the industry hasn’t been standing still when it comes to modifying equipment and protocols to improve its environmental impact, such as exploring creative ways to reduce miles logged either while empty or at less than truckload. Empty miles are estimated to have generated about 17% of greenhouse gas emissions in the U.S. in 2017, per Convoy Research.
Greener trucks are also being developed by several manufacturers, with Daimler, Volvo, and even Tesla at various stages of testing electric models. The Western States Hydrogen Alliance is among entities pushing hydrogen-electric engine technology through various partnerships, while other companies are exploring ways to leverage renewable natural gas (RNG) technology.
Advanced technology that helps drivers lock in on optimal speeds and acceleration and which rely on sensors for everything from tire pressure to aerodynamics is also expected to greatly improve fuel efficiency — all of which, Thropp said, comes at a cost.
“There’s no question that climate change is going to be a big focus of the Biden administration, and I think there are a lot of unknowns there in terms of equipment,” added Thropp. “For our particular business, as electrification takes place and diesel engines are slowly phased out, the whole training program has to be reassessed. That’s going to be an enormous change.”