The financial benefits are one of the most frequent arguments used to promote fracking. There has been quite a bit of research into the economics of it. Such research typically excludes the costs of loss of water, natural habitat and the things that are hard to measure, but nevertheless are still a cost.
In regard to water, the Gas industry typically says they will use around 5 million gallons of fresh water on a well. They sometimes argue that the water can be recycled. However, even though frack waste water remains exempt from the clean water act (Bush & Cheney actions) it is becoming more difficult for waste water treatment plants to process it due to local concerns. So much of the waste goes into deep holes. Or in some alleged cases in PA, old mine shafts or storm water sewers.
The actual water used has been reported to be significantly more than 5 million gallon per well. Recent wells in MI used 21 million gallons per well.
What is the value of a gallon of clean fresh water? What is the cost of removing tens of millions of gallons of fresh water from your favorite stream or lake? Hard to measure, eh?
Those other “soft” or hard to measure costs are just as troubling as water loss – if one appreciates wild places. The cost of the loss of a wild place is hard to measure, but you feel it. Just as you feel the trucks rumbling by, the compressors fire up and the lights illuminate the sky.
So how about the measurable costs verses the benefits? In the sort term there is the potential to create jobs and generate local revenue. Some of that revenue leaves the area, as workers may be transient. However, there is a short term spike in the local economy. But like most bubbles, they burst.
Please read this report by Deborah Rogers. Ms. Rogers has worked for Wall Street financial firms such as Merrill Lynch and Smith Barney. She was appointed as a primary member to the U.S. Extractive Industries Transparency Initiative (USEITI), an advisory committee within the Department of Interior, in 2013 for a three year term. She also served on the Advisory Council for the Federal Reserve Bank of Dallas from 2008-2011. She understands economics and investments.
shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdfWhile the report authored by Ms. Rogers primarily explores how Wall Street investments have driven the shale gas bubble, and have resulted in its pop, the report also documents the lack of any measurable economic benefits to local communities that embrace fracking.
Two sections from the report:
Shale development is not about long-term economic promise for a region.
Such economic promise has failed to materialize beyond the first few years of a shale play's life in any region of the U.S. today that has relative shale maturity. Retail sales per capita and median household income in the core counties of the major plays are underperforming their respective state averages in direct opposition to spurious economic models commissioned by industry (see charts in Appendix). Shale development is not about job creation.
Optimistic job estimates by industry have relied heavily on unrealistic multipliers to claim vast numbers of indirect jobs.1 Such job estimates in industry studies often include professions such as strippers and prostitutes in the overall job gains 2 — not the sort of jobs that most people think of when they hear optimistic numbers from the oil and gas industry. Moreover, direct industry jobs (for onshore and offshore oil and gas) have accounted for less than 1/20 of 1% of the overall U.S. labor market since 2003, according to the Bureau of Labor Statistics.3 This cannot be construed as game changing job creation. I’d really suggest anyone interested in this read Ms. Roger’s report.
There has been some similar work by Arthur Berman. Berman is a petroleum geologist, Associate Editor of the American Association of Petroleum Geologists Bulletin and Director of the Association for the Study of Peak Oil. He maintains the blog Petroleum Truth Report.
From some of Mr. Berman’s work:
In the Eagleford shale, which is supposed to be the mother of all shale oil plays, the annual decline rate is higher than 42%," he stated. "They're going to have to drill hundreds, almost 1000 wells in the Eagleford shale, every year, to keep production flat. Just for one play, we're talking about $10 or $12 billion a year just to replace supply."
Berman believes there's a possibility that this could lead to an economic crisis akin to which happened during the Big Bank bailouts of 2008.
"I add all these things up and it starts to approach the amount of money needed to bail out the banking industry. Where is that money going to come from?," he asked the interviewee.
Art Berman’s report in Real Clear Energy:
www.realclearenergy.org/2012/12/06/arthur_berman_shale_gas_will_be_the_next_bubble_to_pop_250433.htmlFinally, there are the overall climate change concerns. Fracking does nothing to move us in the direction of alternative, fossil free fuels. This, to me, is really the grand prize. Every energy policy decision should, in my opinion, be focused on whether or not it takes us away from fossil fuel and pushes us towards renewables and alternatives. Fracking does not meet that goal.
ps. Another good discussion on many fracking issues:
ecowatch.org/2013/northrup-opponent-fracking/