Report Finds Enormous Cost of HF Delays in New York

The Marcellus shale continues to bring good news to Pennsylvania: high-paying jobs, royalty payments for families, and an affordable feedstock for American manufacturers. Unfortunately, as these benefits are realized by Commonwealth towns and counties, neighboring New York has been left to watch, waiting for these same benefits – much like the natural gas underground — to be brought to the surface. And as a new report highlights, those potential benefits are enormous.

The report from the Empire Center, a project of the Manhattan Institute for Policy Research, takes a look at how shale development is creating jobs and generating income in Pennsylvania counties – and how it could provide the same benefits throughout New York. That hinges, of course, on whether Governor Cuomo will lift the five-year moratorium on hydraulic fracturing.

According to the report, between 2007 and 2011, Pennsylvania counties with more than 200 Marcellus wells experienced a 19 percent rise in per-capita income. Counties with fewer wells also experienced growth; those with 20 to 200 wells had a 14 percent income rise, and those with fewer than 20 wells registered a 12 percent rise. As the report highlights, these benefits are clear and concrete.

“By our count, there are immediate and concrete benefits in hydrofracturing wells: more money in the pockets of the people, more tax revenue for the state. These data deserve close attention and consideration as New York State confronts its decision.” (p.10)

So what do these numbers mean for neighboring New Yorkers? According to the Empire Center’s data, the twenty eight New York counties above the Marcellus Shale would see a 15 percent income-growth rate over the four years following the lifting of the current moratorium – a growth rate of six percent above what they are currently experiencing. That translates to over $8 billion in extra income to upstate New York families.

To put these numbers into action, take the example of Chemung County – a county in southwestern New York with much to gain from hydraulic fracturing. In 2011, Chemung County had a per-capita income of under $36,000, about average for the Empire state’s Marcellus counties. But as the report notes:

“Under the hydrofracturing moratorium, our model projects that Chemung will see a per-capita income of over $38,000 in 2015, a 7 percent increase. Total annual income would have increased by $231 million. However, if hydrofracturing were permitted in Chemung, natural gas extraction start-up and the drilling of just 20 unconventional wells through the period would have brought per-capita income up to an estimated $39,207, an increase of over 10 percent. Well-drilling at the average Pennsylvania rate of 52.3 wells in 2011–15 would bring another full percent of income growth, to $39,540.” (p.9)

Real money in the pockets of real Americans. It’s hard to argue with that – although Governor Cuomo’s continued delays have certainly prevented that income from becoming a reality.

As with anything, the study notes you cannot weigh benefits without costs, and that any final decisions about moving forward with the practice in New York state will consider both.  But as the environmental benefits of clean-burning natural gas continue to unfold, and as technological advances make industry safer and cleaner every day, those costs are on a clear downward trajectory. Also of note: a Yale Graduate Energy Study Group looked at shale development and compared the cost of repairing potential environmental damage with the likely benefits to consumers and producers, the benefits exceeded costs by a factor of up to 400 to one.

Development of the Marcellus Shale is a net positive for consumers, counties, and the environment alike. The quicker New York can recognize those facts and move forward with responsible development, the better it will be for families in the Southern Tier, and indeed for all energy consumers throughout New York.

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