In case readers thought that environmentalists who opposed fracking (despite scientific evidence that should assuage their concerns) were just harmless idiots, think again. Those supposed do-gooders may be compromising Colorado’s energy economy. According to a Denver Business Journal article, “as the public outcry over oil and gas fracking operations has increased, so have the potential liability claims. That has insurance companies scrambling to determine the best ways to cover oil and gas companies.”
As the entire state of Colorado now knows, fracking uses water, sand and chemicals to crack layers of rock far beneath the surface of the earth to release oil and natural gas trapped by the layers of rock. The primary concern of environmentalists is groundwater contamination, a fear that was inflamed, so to speak, by the movie “Gasland”, which interviewed a CO family who could light their tap water on fire. Nevermind that reports of flammable methane seeping into groundwater naturally had been present since the 1970s, far before fracking was introduced.
Nationwide Insurance announced in July 2012 it wouldn’t cover damages related to fracking as general liability coverage wasn’t designed to cover fracking. To be clear, the new policies that fracking operators must obtain have nothing to do with scientific findings, only media scare tactics. Here is what environmental marketing specialist at IMA insurance, Amanda Davies told the DBJ about the new market for these policies:
“The insurance marketplace has really had to evolve and react to the media and the general public’s response to fracking in the last couple of years.”
No, the insurance company hasn’t had to react to new scientific findings, just mass hysteria on the part of the media and the general public. And Matt Damon. While Colorado is scheduled to benefit greatly from fracking, it’s hurdles like having to find new insurance to appropriately cover core business activities that slow the process down and increase costs. In turn, the projected benefits that Colorado actualizes diminish. That hurts everyone.