State Bans On Hydraulic Fracturing Stymie American Prosperity
Environmentalists are waging a war on natural gas in New York, and their governor is listening. Back in January, opponents of natural gas development in New York staged a protest outside of Gov. Cuomo’s State of the State address. Sandra Steingraber, a leading activist for the group, demanded “an end to New York’s ruinous dependency on fracked gas, along with all of the hateful, harmful infrastructure that comes with it.” More recently, on March 7, Steingraber helped organize a protest outside of a natural gas storage facility near Seneca Lake. Over 50 protesters were eventually arrested.
Ironically, America’s “ruinous dependency” on natural gas that Mrs. Steingraber references has led to a 15 percent increase in U.S. manufacturing contributions to GDP since 2008. By demanding the end of natural gas consumption in New York, Mrs. Steingraber was also demanding an end to the economic prosperity which people across the nation have experienced thanks to the growth of hydraulic fracturing, often referred to as “fracking.”
Hydraulic fracturing is already banned in the state of New York; Gov. Cuomo made sure of that in 2015. Residents of New York were left sitting on top of natural gas and crude oil reserves worth thousands (or sometimes millions) of dollars, with no opportunity to benefit from them. In fact, when Gov. Cuomo first threatened to ban hydraulic fracturing, 15 New York towns were so upset they threatened to secede and become a part of Pennsylvania.
Hydraulic fracturing has huge economic potential not only for individual property owners, but also for state and local economies. A recent study from the National Bureau of Economic Research analyzed the economic impact of hydraulic fracturing on over 3,000 counties in the United States. According to the study, every $1 million of oil and gas extraction was associated with the creation of 2.49 new jobs within a 100-mile radius of the frack site. The Bureau’s study also analyzed the effect of hydraulic fracturing on wages and found that the same $1 million in production generated $243,000 in wages and $117,000 in royalties.
Despite these benefits, and despite the fact that hydraulic fracturing is already banned in New York, green activists such as Mrs. Steingraber would prefer to remove all traces of natural gas infrastructure from the state. This prospect, however, is unlikely and impractical. New York is the 4th highest consumer of natural gas in the nation. Even with the ban on hydraulic fracturing, residents and businesses still benefit from cheap natural gas imported from other states that still allow the process.
According to a study from the Brookings Institute, consumer welfare increased nearly $74 billion per year from 2007 to 2013 due to lower natural gas prices from hydraulic fracturing. As the 4th largest consumer of natural gas, New York residents benefit from these low prices. Removing natural gas from the state economy would have devastating effects for consumers and producers.
Most (if not all) of the opposition to hydraulic fracturing stems from environmental concerns. One major claim by individuals opposed to the technology was that the process was causing major contamination of drinking water sources. In 2009, Congress directed the Environmental Protection Agency (EPA) to investigate the effect of hydraulic fracturing on drinking water. In 2015, the EPA released its study, which found no evidence that the process caused “widespread, systemic impacts on drinking water resources in the United States.”
Despite the EPA study, environmentalists continue to call into question the safety of the hydraulic fracturing process. They also continue to disregard the life-changing economic benefits hydraulic fracturing can provide for owners of natural gas reserves. Residents of New York are being denied these benefits to satisfy the interests of lawmakers and environmental groups. Perhaps they would prefer to decide for themselves whether they want to allow hydraulic fracturing on their lands, and turn those speculations into something they can take to the bank.
Randy T Simmons, Ph.D., is director of the Institute of Political Economy and professor of political economy at Utah State University. He also serves as president of Strata, a policy research center based in Logan, Utah. Brian Isom is a student research associate at Strata.