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Fracking basics How fracking is harmful What can be done? Take action now Colorado National |
ECONOMIC IMPACTS Oil and gas extraction not an effective economic development strategy Headwaters Economics studied 26 counties in Western States which have at least 7% of their total jobs in extraction of fossil fuels. Their study showed that average annual growth in personal income and employment growth were lower in counties with extraction industries than counties without it. Energy-dependent county economies had: • Less economic diversity While energy focusing counties race forward and then falter, the non-energy peer counties grow steadily. At the finish line, counties that focus on broader development choices are better off, with higher rates of growth, more diverse economies, better-educated populations, a smaller gap between high and low income households, and more retirement and investment income. For officials at Mesa State College, students have been the concern, as male high school graduates have increasingly chosen oil and gas jobs with salaries that can hit $80,000 rather than pursue higher education. Community leaders worry about the long-term effect of an undereducated population, yet business owners have appreciated the impact these high wages have had on the local economy. Boom and bust When oil shale is mentioned on the Western Slope of Colorado, it's discussed as a boondoggle that brought their economy to its knees. The day that Exxon closed down its oil shale operations and sent home over 2,000 workers -- May 2, 1982 -- is still referred to as Black Sunday. As energy companies arrived on the Western Slope again between 2000 and 2006, revenues, costs, and growth rates jumped in Garfield and Mesa Counties. Nearly every community grew by at least 6%, with Grand Junction showing 11.7% growth and the small town of New Castle growing 66%. These communities have struggled to expand services at a rate that kept pace with growth. In 2009, growth started to show signs of slacking. Companies began to scale back plans for new wells and idled a significant number of the drill rigs they had been operating. A few roughnecks and area residents have begun to openly talk of a "bust."
Exaggerated job claims Real data about job creation raise questions about whether the rosy industry projections are accurate. In the long term, drilling regions may be left worse off than before they boomed. Evidence from already developed shale plays indicates that shale gas drilling relies mostly on out-of-state workers. Local employment is concentrated in trucking, construction and retail jobs -- many of which are part-time, short-term, or low-pay. For example, the Antero project in Battlement Mesa will employ approximately 120-150 people. Some Battlement Mesa residents will benefit directly from the Antero project but most residents will not directly benefit.
Communities might assume gas and oil drilling will bring new jobs and prosperity, but are those assumptions correct? Food & Water Watch closely examined a recent report touting the job-creation potential of shale gas development and found numerous inaccuracies and methodological flaws. No windfall in El Paso County In 2000, El Paso County abolished the business personal property tax which is assessed on things like machinery, equipment and supplies. Because oil and gas rigs are assessed as personal property, the exemption would cost the county many millions if drilling gets traction here. Reinstating the tax would constitute a tax increase, which requires voter approval under the Taxpayer's Bill of Rights. Commissioner Sallie Clark says the county could require bonds to cover road damage, for example, but she and other commissioners oppose reinstating the personal property tax, calling it "double taxation." Increased housing costs The Colorado Department of Local Affairs asks, "Who could have imagined, for example, that a significant impact of oil and gas development in western Colorado at one time would be a shortage of hotel and motel rooms for tourists, and the resulting impact on local economies through loss of tax revenues?" O i l a n d g a s d e v e l o p m e n t h a s i n c r e a s e d p o p u l a t i o n d e n s i t i e s , s o m e o f w h i c h i s t h e r e s u l t o f a n i n c r e a s e i n t h e n u m b e r o f t e m p o r a r y a n d t r a n s i e n t w o r k e r s . T h e w e s t e r n s l o p e h a s a l a r g e n u m b e r o f t e m p o r a r y w o r k e r s l i v i n g i n m o t e l r o o m s , R V c a m p g r o u n d s , a n d t e m p o r a r y c a m p s , o f t e n c a l l e d “m a n c a m p s , ” i n t h e r e g i o n . W h i l e t h e r e a r e n o d a t a o n t h e e x a c t n u m b e r o f t e m p o r a r y w o r k e r s , i t i s e s t i m a t e d t h a t 2 0 p e r c e n t o f t h e n a t u r a l g a s w o r k f o r c e i s c o m p r i s e d o f w o r k e r s w h o d o n o t h a v e a p e r m a n e n t r e s i d e n c e w i t h i n t h e r e g i o n o r t h e s u r r o u n d i n g c o u n t i e s . Local governments often see a loss of available workforce housing as the local housing stock is taken up by industry employees. This makes it increasingly difficult for employers to recruit workers to the area because the increase in housing costs outpaces growth in salaries. Upward pressures on housing disproportionately impact low wage earners, persons on fixed income and seniors. Social services and non-profit housing agencies and authorities struggle to place people in lower rent or assisted housing in a heated rental market. Rifle's population was 6784 in 2000. It grew to 8446 in 2006. Some studies predict it will top 20,000 residents by 2020. Rising crime rates have stretched the police department thin, traffic-choked city streets laden with heavy trucks have prompted complaints from residents, and rapidly rising property values have made it difficult for middle class workers to live in the community. As the median home price around Rifle skyrocketed from $191,000 in 2003 to over $297,000 in 2007, vital members of the town's workforce have been increasingly forced to live down the valley as far away as Grand Junction and commute. In the summer of 2007, more than 20 prospective teachers turned down job offers because they could not afford housing in town.
Increased infrastructure costs, fire protection and police Many of the costs of shale gas extraction fall on county and local government, including localities where drilling makes no appreciable contribution to the economy through job creation or tax revenues. Certain positions like police officers become increasingly harder to fill because local governments cannot compete with the pay scale of the industry. Similar challenges may be felt in the private service and retail sector, as labor migrates to higher paying jobs, leaving service employers short handed. In an attempt to remedy this, local governments and other employers must offer additional incentives to retain workers or to hire workers lost to the industry.
Shale gas extraction has cumulative and regional effects that spread far beyond the locations where drilling occurs. This regional infrastructure includes compressor plants, pipelines, water extraction sites and toxic waste disposal facilities, as well as increased heavy truck volume. All of these require regulation and enforcement capacity not currently in place, and impose environmental, administrative and public safety costs that somebody has to pay. During a drilling boom, communities must expand police forces, enlarge school systems and prepare emergency services for the kind of incident that drilling operations can produce. When drilling ends, jobs and population exit, leaving the human and physical infrastructure built to support a boomtown population for a much smaller population to support. Traffic congestion and deteriorating roads The Colorado Department of Local Affairs states that some local governments are struggling to maintain roadways and bridges because of the increase in heavy haul vehicle traffic from oil and gas development. In general, the effect is a substantial decrease in the quality of roadways because of an inability to keep pace with the necessary maintenance and improvements. Because most oil and gas activity occurs in the unincorporated rural portions of counties, those roads are not developed for commuter traffic loads or consistent use by heavy equipment vehicles such as drill rigs or service semis. As oil and gas development increases, the road limitations create congestion where none previously existed.
In small Cogan House Township in northern Lycoming County, PA, supervisor Daniel Roupp took matters into his own hands and blocked Buckhorn Mountain Road with downed trees to force the drilling company, Range Resources, to make repairs. For months, the township had asked Range Resources to repair the road. In December 2011, the Department of Environmental Protection told the township it was in violation of erosion and sediment regulations. The compliance order required them to prohibit vehicles of more than six tons from the road and submit a plan for its stabilization. Before natural gas drilling began, 10 to 20 vehicles a week used the road. Now, upwards of 200 trucks use it daily when fracking occurs. The township tried to comply with the DEP order by erecting signs and using barricades banning heavy vehicles, but truck drivers ignored them. Tourism suffers Widespread drilling could substantially damage our region's "brand," and threaten long-term growth of tourism. Drilling would change pristine rural areas to gritty and industrial. Our region's ability to attract tourism may be damaged in the long-term, as the perception (and reality) of industrialization may far outlast the employment and monetary benefits of gas drilling. Decreases property values and threatens public health
Despite growing natural energy exploration and development in Grand Junction, home prices are forecast to decline 5.1% in 2012, some of the fastest rates in the state. While oil and gas development has economic benefits, it also has significant costs that are threatening public health, air and water quality, and quality of life. While oil and gas companies continue to reap record profits while enjoying billions in federal tax subsidies, rural communities suffer.
Pike County, PA, Commissioner Karl Wagner Jr. says, "If a property owner cannot get a mortgage or sell their house because of gas lease, they could petition the Board of Appeals to have the fair market value of the property lowered." That could result in lower taxes and less revenue for the county. Jennifer Canfield, a real estate broker in the Upper Delaware Valley, PA, laments, "Even if sellers want to hand over the revenue derived from a future well, the clientele I've always relied upon don't care to come here for that. "In my own case, the phone stopped ringing when it became widely known how many thousands of acres were signed up. "It would be helpful if the same people who signed leases could see how much we have lost in revenue from property and home buyers who made use of local services, frequented retail shops and restaurants and hired local contractors for building and remodeling. We can someday, perhaps, recover from the economic downturn 'but leases run with the land.'" Cost of cleanup Billions of dollars have been spent in Colorado to clean up the legacy of the past. There are 17 Superfund sites in Colorado. Two of the sites are directly related to the production of armaments, including nuclear and chemical weapons. The remaining Superfund sites are related to mining, uranium or radium milling, industrial operations, and hazardous waste disposal. Industrial activities, mining operations (non-Superfund), leaking petroleum tanks, oil and gas production, agriculture, and waste disposal have contaminated other areas. The total cost of cleanups and monitoring are unknown, but the cost runs into the millions of dollars annually.
REFERENCES:
Western Colorado Congress -- Oil Shale Background Information
Hydrofracking a boom-bust endeavor
Watch Rural Impact! http://shaleshock.org/2008/12/watch-rural-impact Property devaluation hits tax revenues Coming up dry http://www.csindy.com/colorado/coming-up-dry/Content?oid=2401552 From the former mayor of Dish, TX http://lizjbucar.wordpress.com/2010/04/ Housing Predictor - Colorado http://www.housingpredictor.com/2012/colorado.html Managing and Mitigating the Next Boom With housing shortage in western ND, some look to make a buck Life in oil field 'man camp' not for everyone http://www.pressherald.com/life/man-camp.html Ad valorem tax doesn't touch road repair costs http://www.un-naturalgas.org/ShopperAds2011.htm Lycoming County township official blocks road with downed trees to force drilling company to make repairs http://www.pennlive.com/midstate/index.ssf/2011/12/lycoming_county_township_offic.html Environmental Impacts http://www.centerwest.org/publications/oilshale/5managing/1impacts.php
True Grit: Can Your Community Afford the Oil and Gas Industry?
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