Tuesday, May 7, 2013

Wages only part of 'frackonomics' picture

Posted By on Tue, May 7, 2013 at 9:56 AM

The conservative Empire Center for New York State Policy has released a report that says, predictably, that fracking could boost incomes in 28 New York counties.

The report's authors based their conclusions on data from Pennsylvania counties where Marcellus Shale drilling is occurring. They say that had New York allowed its counties to "fully exploit the Marcellus Shale," the 28 counties would have seen income growth of 15 percent over the past four years. And if New York State green-lights fracking, the counties could still see incomes grow by 15 percent — or an additional $8 billion — over the next four years.

But news reports have pointed out flaws in the report. For example, a story from Gannett's Albany Bureau points out that the $8 billion growth conclusion relies on the unlikely premise that each of the counties would have 400 wells drilled in that four-year time period.

I see a couple of flaws with the report, too. It claims to address the economic impact of permitting fracking, but while it focuses on income growth, it doesn't factor in costs. Road maintenance comes quickly to mind: well-related truck traffic chews up local roads fast and if the drilling companies don't cover repair costs, the public has to.

And the report doesn't say who will earn these higher wages. In Pennsylvania, while plenty of the workers are local, many have come from other states: ones with longer histories of drilling. In a 2011 story, the New York Times reported that the influx of out-of-state oil and gas workers was driving up housing costs in some Pennsylvania counties.

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