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Resource Curse: Why the Economic Boom That Fracking Promises Will Be a Bust For Most People

Evidence suggests that counties where drilling occurs will be in worse shape economically down the road.
 
 
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The following article is part of AlterNet's series on poverty, Hard Times USA. 

Drillers 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.

Eastern 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 formations.

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 environment.

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 evidence.”

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.

Collateral Damage

A 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 Pennsylvania.”

The economics of extractive industries like gas drilling are pretty simple. As Philip Bump writes for Grist about Cuomo’s plan:

The 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.

But 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.

For 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.

But 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.”

 
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