Gas Drilling:  Economic Boom or Bust?
by Joan Tubridy

On January 19, 2010, New York State Oil and Gas industry lobbyist Brad Gill stated that because of gas drilling [using hydrofracking], Pennsylvania is “thriving with tens of thousands of jobs and tremendous economic vitality.” We must closely scrutinize the widely-held assertion that the economic benefits of gas drilling in shale will outweigh its true costs.

Won’t gas drilling bring jobs and ‘economic vitality’?

Not many jobs have been created after two years of intensive drilling in Pennsylvania, where crews are often brought in with the rigs. New York’s and Pennsylvania’s unemployment rates from 2005 to the present run neck and neck, and the current average weekly wage in New York is $868 compared with $805 for Pennsylvania. At their April 14 meeting, Commissioners of Susquehanna County, PA, a county of intense drilling activity, adopted a resolution designating the county a “Recovery Area”, denoting significant poverty, unemployment, home foreclosures, or general distress.

Will gas drilling have an effect on other economic endeavors?

Existing industries such as grapes, wine, agriculture, tourism, outdoor recreation, hunting, and fishing are threatened by industrial shale gas drilling. The estimated potential gain of $22 billion from gas drilling in New York State over the next 20 years pales in comparison with the projected gain of $300 billion from these other industries over the same period. A diverse economy will be ruined and replaced by a boom and bust industry.

Could there be increased tax revenues to municipalities?

While energy boomtowns see revenues increase from gas drilling, it is rarely enough to meet the increased demands on infrastructure, maintenance, and administration. Deprived of local control over gas extraction, municipalities will face new costs without adequate funding of base-line water testing, emergency response, health department monitoring of complaints, tax assessment changes, and demands on school systems.

Will the economic benefit to local communities exceed the infrastructure costs of building and repairing roads?

The NYS DEC’s own figures project 715 to 2615 truck trips per single gas well.  Communities have seen a rise in road repair and infrastructure costs that far exceed the revenues generated by gas drilling. Without adequate bonding, taxes will increase.

Will there be any effect on social services, emergency services, and law enforcement from gas drilling?

Areas of gas drilling activity have experienced increases in crime and drug use; demands on emergency services from chemical spills, fires, accidents on the rigs and on the roads; demands on health care/emergency room services; and requests for housing assistance by non-industry residents.

Will property values be affected by gas drilling?

The Department of Housing and Urban Development Handbook states, “A property with a gas or oil lease is therefore not eligible for Federal Housing Adminstration financing…” and, “No existing dwelling may be located closer than 300 feet from an active or planned drilling site.” This will affect leased as well as adjacent unleased properties. Visions Federal Credit Union, located throughout the Southern Tier and in Syracuse, will not give a mortgage loan secured by the property if there is an oil and gas lease on the property. Some insurance companies have either raised premiums or will not insure properties with gas leases, considered business exposures with increased risk of injury.

Won’t landlords enjoy higher rents from gas rig workers?

Yes. And homelessness is on the rise in areas of gas drilling activity, as fixed income residents and those not involved in the industry are squeezed out of affordable housing by industry workers able to pay higher than average rents.

The economic considerations above do not even attempt to address the enormous environmental and health concerns of water, air, and soil pollution from gas drilling. A more in-depth analysis is available in Dr. J. M. Barth’s March 2010 white paper.  When the drill rigs roll into town there will be winners and losers, the haves and have-nots, but even the winners will lose.