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March 6, 2013 |
The following article is part of AlterNet's series on poverty, Hard Times USA. This article was published in partnership with GlobalPossibilities.org.
hit the country’s first oil jackpot in Pennsylvania in 1859. Towns like
Titusville and Pithole grew from a few hundred to more than 10,000
nearly overnight. But with the boom, inevitably came the bust. And it’s a
history that may repeat itself in the same region soon.
states like Pennsylvania, New York, Ohio, and West Virginia sit atop the
Marcellus Shale. High-volume horizontal hydraulic fracturing, often
referred to as “fracking,” has put a bull’s-eye on the region by
companies interested in drilling for gas tucked deep into the shale
There’s been controversy over how much havoc fracking
will wreak on the environment, with reports of air pollution, water
contamination and other abuses from many living near drilling sites.
Investigations continue to assess the impacts on human health and the
But what has received less scrutiny are the economic
promises made by gas companies and parroted in the media. The question
is often posed whether the environmental risks outweigh the economic
gains, but the “gains” themselves are far from a given. A report out of
Cornell University titled, “A Comprehensive Economic Impact Analysis of
Natural Gas Extraction in the Marcellus Shale,” by Susan Christopherson
and Ned Rightor found
“The assertion that shale gas drilling will have positive consequences
for both New York and Pennsylvania's economies is based on limited
When it comes to long-term economic development,
there’s ample evidence to suggest that counties where drilling occurs
will be in worse shape down the road, and that even during the drilling
and producing phases, there will be a few winners and likely a whole lot
of losers, especially among lower-income individuals. Furthermore, the
areas targeted for drilling are often the ones already struggling
economically, which means less wealthy individuals and communities may
become further impoverished.
Christopherson, a professor in
Cornell University’s Department of City and Regional Planning, has been
studying the economic impacts of fracking in the Marcellus for years.
“If those places were rich we wouldn't be asking these questions because
they wouldn't want it,” she said.
fracking moratorium remains in place in New York, although it could be
lifted at any time. If it is, there are concerns that some of the
state’s economically hardest hit areas will take the brunt of drilling.
The New York Times reported
that, “Gov. Andrew M. Cuomo’s administration is pursuing a plan to
limit the controversial drilling method known as hydraulic fracturing to
portions of several struggling New York counties along the border with
The economics of extractive industries like gas drilling are pretty simple. As Philip Bump writes
for Grist about Cuomo’s plan:
areas that will be opened to fracking are those areas over the
Marcellus shale formation. That makes sense. But unfortunately, they’re
also areas of the state with some of the highest rates of poverty.
one of the challenges of the fossil fuel economy is that its
facilities, refineries, and extraction points are dirty, messy, and rife
with pollution. Such things don’t go in the wealthier parts of town —
or, often, the wealthier parts of a state.
residents who are economically struggling, the offer of money for a gas
lease can be too good to ignore – some may not realize the risks, while
others are willing to incur them because they lack other options.
if something does go wrong, many feel that they have little recourse
because of their economic position. “If they end up with pollution on
their own land, they don’t want to talk about it because then they are
afraid the gas drillers will go away,” said Alison Rose Levy, a
journalist who has been covering fracking in the Marcellus Shale since
2009. “They are in such financial duress that they will sacrifice the
water quality on their land, and deny that pollution has occurred even
to the point of making themselves or their family members ill because
they are afraid of the companies -- they are afraid the company will
withdraw the opportunity for some kind of financial benefit.”
and Wayne Woods, residents of Doddridge County, West Virginia have
found that many people in their community are unwilling to speak up
because they depend on the oil and gas industry for employment. They
have neighbors living with water contamination but, “They don’t want to
say anything because it’s part of the culture of intimidation by other
members of the community,” said Wayne.
The more economically strapped communities are, the more likely that oil and gas companies will find little resistance.
has a long history of resource extraction, and so does West Virginia,
an epicenter of coal mining. The West Virginia Center on Budget and
Policy took a look at how the state has fared in a report
called, “Boom and Busts: The Impact of West Virginia’s Energy Economy.”
co-authors Sean O’Leary and Ted Boettner assessed whether or not
development in the Marcellus Shale underlying the state will be an
economic blessing or a curse. “Although coal and natural gas contribute
millions of dollars in revenue to the state's budget, it also appears
that communities in West Virginia that historically have relied heavily
on natural resource extractive industries have underperformed
economically in the long term compared to the state as a whole,” they write
energy development boomed in the ‘70s, after it went bust in the ‘80s
mining counties suffered in the short- and the long-term. They explain:
did worse than the state average on a range of factors, such as
earnings and personal income growth, population growth, and employment.
Today, these counties have higher poverty rates, lower median incomes,
and worse health outcomes than the state average. Despite the rebounds
in the energy sector in the 2000s, mining counties continue to struggle
in comparison with the rest of West Virginia.
communities can rely on energy development for economic growth in the
short-term, the boom is unsustainable. If trends hold, the boom
ultimately leads to a bust, followed by decades of underperformance.
The same could hold true for the fracking boom as research thus far in Pennsylvania suggests.
A report by the Keystone Center foundthat
claims of job creation were hyped. “The Marcellus Shale is making a
small positive contribution to recent job growth in Pennsylvania,” they
found. “The size of that contribution, however, has been substantially
inflated based on a basic misunderstanding of the difference between
‘new hires’ and job creation. The modest contribution of the Marcellus
Shale to job growth must also be balanced against the impact of drilling
on other industries, such as tourism and the Pennsylvania hardwoods
Inaccurate job creation numbers aren’t the only
problem – there is also an issue of how many jobs may be lost. Fracking
of this kind, Christopherson says, is incompatible with tourism and
with agriculture because fracking has a heavy industrial footprint on
the landscape: “You have not just the well pad, which are big things,
but you have 1,000 truck trips per well multiplied by the number of
wells, you have compressor plants, you have the pipelines, you have
water extraction sites, you have chemicals and gravel that have to be
brought in. In the Eastern part of the US you also have to bring in
people -- you have man camps. It drives out other kinds of industry.”
industry that may be affected is agriculture. A study by Penn State
Extension looked at counties with at least 10,000 dairy cows. In those
counties that had at 150 wells or more in the Marcellus Shale, there was
an 18.5 percent decrease in milk production, while counties without
Marcellus wells saw a slight increase in production.
And there are
other implications. “Dairy farmers in Northern Pennsylvania and the
Southern Tier of New York, who are already in a marginal economic
situation, are being further squeezed because of rising costs for
transporting their milk to the dairies,” Christopherson and Rightor write
“These businesses may go under during the drilling phase, leaving the
region with fewer businesses outside of gas drilling, and thus a less diverse and more volatile economy.”
All this industrialization impacts areas that may not be getting drilling revenue, also. As Christopherson and Rightor report
“These elements of the industrial landscape will be located where
geologic or logistical factors dictate, but not necessarily in the
jurisdictions where drilling is currently taking place or production
(and therefore tax revenue) is being generated.”
end up with air, water and noise pollution -- and no economic payback.
And it doesn’t just drive out industry, it drives out people who live
there, especially those at the bottom of the economic ladder.
you're a low-income person, says Christopherson, “you're in deep
trouble” because the cost of living goes up. “In some places in
Pennsylvania a gallon of milk costs $7,” she said. “Costs for housing
will go skyrocketing because they can rent to drillers. Lower-income
people generally get pushed out of their lower-cost housing and they
have to leave the area. The economics term for it is 'crowding out' --
the process of intensive natural resource development drives out, crowds
out other industries by raising the costs. Companies don't want to move
into that area because the labor costs are too high, there is a high
cost of living.”
industrial footprint means that there are far-reaching consequences for
communities, not just at drilling sites. The 37 families that lived at
the Riverdale Mobile Home Village in north-central Pennsylvania found
out firsthand what “crowding out” is all about.
sitting aside the Susquehanna River suddenly became a hot commodity when
gas companies came to town. The families in the park, many of whom were
elderly or on fixed incomes, found out they had two months until the
land they lived on was being sold. The buyer, writes
Walter Brasch of Counterpunch, was Aqua PRV, part of water company Aqua
America. “Aqua had received permission from the Susquehanna River Basin
Commission (SRBC) to withdraw three million gallons of water a day from
the Susquehanna; the 37 families of the mobile home village would just
be in the way,” Brasch explains
“The company intends to build a pump station and create a pipe system
to provide water to natural gas companies that use hydraulic
While residents of the park owned their trailers,
picking up and moving to another location was no easy task. The cost of
moving a trailer can range from $6,000 to $11,000 and that’s if you can
move the trailer at all. Many of the Riverdale residents had older
trailers with tin roofs or siding that couldn’t be moved. And that’s
only one part of the problem; the other part is that there was nowhere
for them to go.
the natural gas companies are bringing in thousands of employees to
frack the land, there is a shortage of apartments, most with inflated
prices to take advantage of the well-paid roustabouts, drivers, and
technicians who moved into the area, and spend their money on local
businesses eager to improve their own profits. During the past two
years, rents have doubled and tripled. …The current mobile home owners
paid $200 a month for their lot.
only are there few lots available and apartments are too expensive, but
most residents don’t qualify for a house mortgage; and there are
waiting lists for senior citizen and low-income housing.
story is the same across the Marcellus region where drilling has taken
place. “The natural gas boom has made affordable housing as obsolete as
the anthracite coal that once drove the region’s energy economy,” concludes
who sign big leases and some businesses, like hotels, bars and retail
shops, along with drilling-related companies (trucks, waste disposal,
etc. ), will inevitably have short-term gains, but Christopherson cautions
“The rising tide is not likely to lift all boats: there will be losing
communities, and individuals who are displaced or left behind. Moreover,
the experience of many economies based on extractive industries warns
us that short-term gains frequently fail to translate into lasting,
community-wide economic development.”
In Pennsylvania, research
has found that many of the jobs go to skilled out-of-state workers.
“Drilling crews usually arrive from places like Tulsa,” said
Christopherson. “They fly in for three weeks, drill and fly home.”
members lose out in other ways, too. One of the biggest impacts, and
one of the most costly to taxpayers, is truck traffic that has caused
accidents and damaged roads. In the report
“The Economic Consequences of Marcellus Shale Gas Extraction: Key
Issues,” authored by Christopherson for Cornell University Department of
City and Regional Planning, she found that communities are getting
After severe damage to roads, Pennsylvania
transportation districts had to post weight limit signs on thousands of
miles of roads since fracking began. She writes:
bond security costs for overweight truck travel on a posted road there –
the financial incentive for a company to repair road damage -- are
limited to a maximum of $6,000 per mile for unpaved roads and $12,500
per mile for paved roads. This is adequate to cover only 10- 20% of the
damage; road reconstruction can easily exceed $100,000 per mile.
Additional public costs for protecting roads -- pre-bonding surveys,
road condition surveys, new data collection systems, and posting roads
-- are also significant.
Northern Tier of Pennsylvania, she found that trucks were carrying
weight over the legal limit. More than 5,800 roadside inspections were
performed on trucks working for the drilling industry, and “42 percent
of those resulted in pulling either the driver or vehicle out of
service,” she reported. The cost to the state for enforcement has
reached over $550,000.
Communities also face increased pressure on schools, police, and healthcare services with the influx of workers. Hospitals have complained of rising debt
because of the large number of uninsured workers they have started caring for since drilling began.
of political maneuvering, fracking is exempt from major national
environmental laws like the Clean Water Act and the Safe Drinking Water
Act. But even state regulations are not adequately enforced; some states
and counties lack the political will and other simply lack the
resources, which has led some companies to take advantage, to the
detriment of residents.
In Sun Valley, West Virginia it is believed oil and gas companies (or a company) are to blame for millions of gallons of water stolen
from fire hydrants – a tab ratepayers may be forced to pick up. Tankers
are able to fill up thousands of gallons in less than five minutes, so
the culprits haven’t been apprehended.
In Ohio, a company was recently caught dumping
20,000 gallons of toxic fracking wastewater into a local river. In 2011, another company
was caught dumping millions of gallons of fracking wastewater into
rivers, streams and sewers, with economic and environmental consequences
for the communities impacted. The owner got a slap on the wrist.
longer Marcellus drilling goes on, the more stories communities are
collecting about the various impacts. All of these should be taken into
consideration when calculating what an area stands to gain or lose from
“When the economic waters recede, the flotsam left behind can look more like the aftermath of a flood than of a rising tide,” wrote
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