Study finds net benefit for fracking communities

AP file photo
This is a natural-gas fracking site in New Milford, Pennsylvania.

Communities near hydraulic fracturing activity see notable economic benefits but are harmed in other areas, such as crime rate and pollution, according to a recent study published by the Energy Policy Institute at the University of Chicago.

The study, published in December, found shale development at the community level raised the average household price by roughly $1,300 to $1,900 per year, after factoring in quality-of-life costs, driven by a 10 percent increase in employment and a 7 percent increase in average income.

The Marcellus Shale area was one of the largest beneficiaries. Housing prices near the nine shale basins analyzed increased by an average of 6 percent, and the Marcellus Shale region saw the second-largest increase in prices at 9 percent. The largest increase belonged to North Dakota’s Bakken Shale formation, at a massive 23 percent.

But the report said fracking also introduced costs to these communities. The study’s four authors estimated the typical household’s quality of life was reduced by about $1,000 to $1,600 annually after fracking occurred, factoring in more noise and air pollution, beliefs regarding negative health effects and higher crime rates despite an increase in public safety spending.

The study factored in the commercial viability of each shale — the higher meaning more potential for community development — and the variations in each shale community, such as crime and pollution, that determine quality of life through data purchased from the international gas and oil consulting company Rystad Energy.

The economic effects of fracking varied widely by community, and the authors were not able to pinpoint exactly why some areas fared better.

Increased fracking activity in the Haynesville Shale area of Texas and Louisiana hit the communities the hardest, with households seeing a net negative impact of $1,800 per year. The Eagle Ford Shale area of Texas also saw a decrease in household prices.

Unsurprisingly, shale communities saw job growth in natural resources and mining, construction and trade and transportation services, according to the study. There were slight drops in government employment and business service jobs.

The study said some groups that would not be connected to fracking-related jobs, such as unemployed students and senior citizens or those who don’t own mineral rights to their property, wouldn’t see benefits from any economic boom.

“The heterogeneity in effects lends support to the idea that local communities should have a voice in decision making about fracking,” said Princeton’s Janet Currie, a co-author of the report, in EPIC’s news release about the study. “It will also be important to think about whether it is possible to compensate individual people in local communities who experience the costs of fracking without participating in the benefits.”

The authors concluded, however, that fracking is a net positive for the communities affected by it.

“This data indicates that the average local benefits from hydraulic fracturing outweigh the costs, though this may change as more information about the environmental and health impacts of hydraulic fracturing is revealed,” the authors wrote in their research summary.

Environmental advocacy groups and energy companies have been clashing for years over whether economic growth from fracking is worth the trouble of environmental risks and an over-reliance on energy. West Virginia has heavily relied on natural gas output in recent years, and its economy suffered when gas prices dropped.

In 2015, natural gas production overtook coal as the nation’s primary source of electric power generation.

Natural gas pipeline proposals are being introduced and debated across the country, including the Atlantic Coast Pipeline, which would pass through national forests in West Virginia.

Fracking proponents argue that expanding and exploring shale formations is a way to drive West Virginia out of its budget shortfall and bring it up to speed economically with the rest of the country. Anne Blankenship, director of the West Virginia Oil and Natural Gas Association, wrote in a Daily Mail Opinion commentary that the industry “is a foundation of our state’s economy” and pays more than $1.5 billion in total wages.

Jim Kotcon, chairman of the West Virginia chapter of the Sierra Club, an environmental organization, said the report’s conclusion “seriously overestimates” benefits seen in fracking communities. He added that out-of-state gas companies have the most to gain and do not compensate those affected by environmental and social disturbances, such as a reduction in air quality or water contamination.

“It’s clear that, in fracking, there are economic winners and losers,” Kotcon said. “People that are living in these areas will hurt the most.”

Reach Max Garland at max.garland@wvgazettemail.com, 304-348-4886 or follow @MaxGarlandTypes on Twitter.

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