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Research & Commentary: Study Shows a Hydraulic Fracturing Ban Would Devastate Pennsylvania

February 26, 2020

Over 600,000 Job Lost And $261 Billion In Lost GDP By 2025 If Fracking Banned In The Keystone State

A report released in November 2019 by the U.S. Chamber of Commerce’s Global Energy Institute details how a ban on hydraulic fracturing (colloquially known as “fracking”) would have devastating consequences for the Pennsylvania economy and would displace “hundreds of thousands of jobs” throughout the commonwealth.

According to the study, if a fracking ban took place, the Keystone State would experience the cumulative loss of 609,000 jobs thanks to higher residential and business energy costs and upstream production losses, as well as $261 billion in lost gross domestic product (GDP), and a $23.4 billion loss in state and local tax revenues by 2025. Over that same period, Pennsylvania households would experience a $114 billion loss of income and Pennsylvanians would suffer a per capita cost-of-living increase of $4,654.

These losses would naturally begin taking effect immediately. In 2021 alone, the study estimates 125,000 job losses, $19 billion in lost GDP, $1.6 billion in lost state and local tax revenue, and an $8 billion loss in household income.

The development of the Marcellus and Utica shale plays in Pennsylvania has turned the commonwealth into the second-largest producer of natural gas in the United States, just behind Texas. This massive increase in domestic shale development, led by fracking, has caused natural gas prices to plummet in Pennsylvania, saving commonwealth residents and businesses more than $30.5 billion from 2006 to 2016, according to a September 2018 study from the Consumer Energy Alliance. This is backed up by a September 2019 report prepared by Kleinhenz & Associates for the Ohio Oil and Gas Energy Education Program showing total savings thanks to fracking for Pennsylvania residents from 2008 to 2018 amounts to $43 billion.

Additionally, the oil and natural gas industries supported more than 322,000 jobs in Pennsylvania in 2015, producing $23 billion in wages and $44.5 billion in economic impact, according to a 2017 American Petroleum Institute study prepared by PricewaterhouseCoopers.

Hydraulic fracturing activity delivers $1,300 to $1,900 in annual benefits to local households, including “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices,” according to a December 2016 study conducted by researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology. 

Despite claims from anti-fracking groups, shale development in Pennsylvania is also environmentally safe. To highlight just one recent example from the scientific literature on the issue, a July 2019 study published in the peer-reviewed journal Environmental Science & Technology, funded by the National Science Foundation and U.S. Geological Survey, and conducted by researchers at Penn State University (PSU), found virtually no methane contamination of groundwater sources near oil and natural gas well sites located in Pennsylvania.

The PSU researchers took 20,751 samples across Pennsylvania and found “possible” signs of methane contamination in only 17 samples, or just 0.08 percent of samples. Put another way, 99.92 percent of the samples came back free of methane.

“Of the 17 samples that came back positive for new methane, 13 came from the northeast,” a press release from Penn State notes. “None came from sites within 2,500 feet of known […] wells. State law holds oil and gas companies responsible for methane leaks that affect wells within that 2,500-foot area.”

It is also important to note that methane in groundwater is a naturally occurring phenomenon in Pennsylvania and may not necessarily be the result of drilling activity. “It’s not uncommon to see methane in groundwater in the Marcellus shale and other shale plays,” said Tao Wen, one of the study’s researchers. “Also, if methane had been in the groundwater for a long time, bacteria would have reduced the iron and sulfate. The reduced forms would have precipitated as iron sulfide, or pyrite.”

Since 2010, more than two dozen independent studies have not found any systemic impact on groundwater caused by the 110,000 oil and natural gas wells in operation across the country. Moreover, these studies are affirmed by the Environmental Protection Agency’s own $29 million, six-year study of fracking’s benign impact on groundwater sources.

In light of the immense number of studies showing fracking is relatively safe and provides substantial economic benefits, lawmakers should not ban fracking, place a moratorium on, or place onerous regulations on drilling activity. Of course, this does not mean energy companies shouldn’t continue to develop technologies that make the fracking process safer or more efficient. Nothing is meant to suggest there are zero risks associated with fracking or other drilling operations. However, those risks are quite small compared to the enormous benefits fracking continues to provide to Pennsylvania.

The following documents provide more information about hydraulic fracturing and fossil fuels.

What If…Hydraulic Fracturing Were Banned? (2020 Edition)
https://www.globalenergyinstitute.org/sites/default/files/2019-12/hf_ban_report_final.pdf
This study from the Global Energy Institute at the U.S. Chamber of Commerce says a ban on fracking in the United States would be catastrophic for our economy. Their analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product by $7.1 trillion. Tax revenue at the local, state, and federal levels would decline by nearly a combined $1.9 trillion. Natural gas prices would leap by 324 percent, causing household energy bills to more than quadruple. By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130 per barrel, while less domestic energy production would also mean less energy security.

Debunking Four Persistent Myths about Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/debunking-four-persistent-myths-about-hydraulic-fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.

Everyday Energy for Pennsylvania
https://consumerenergyalliance.org/cms/wp-content/uploads/2018/08/CEA-Pennsylvania-Report.pdf
This report from the Consumer Energy Alliance examined how the shale revolution across the Marcellus region has provided benefits to Pennsylvania’s energy consumers by boosting disposable income and revitalizing communities, saving residential users $13.3 billion, and commercial and industrial users $17.2 billion.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

The Value of U.S. Energy Innovation and Policies Supporting the Shale Revolution
https://www.whitehouse.gov/wp-content/uploads/2019/10/The-Value-of-U.S.-Energy-Innovation-and-Policies-Supporting-the-Shale-Revolution.pdf
This report from the White House Council of Economic Advisors estimates that increased oil and natural gas production due to the fracking revolution is saving American families a combined $203 billion annually, or around $2,500 per family. On top of this, the fracking revolution is benefitting the environment, lowering energy-related greenhouse gas emissions by 527 million metric tons between 2005 and 2017.

Local Fiscal Effects of a Drilling Downturn: Local Government Impacts of Decreased Oil and Gas Activity in Five U.S. Shale Regions
http://www.rff.org/files/document/file/RFF%20Rpt-SPF.pdf
This study from Resources for the Future finds 82 percent of communities in the five largest shale regions in the United States experienced a net fiscal benefit from hydraulic fracturing despite a large drop in oil and natural gas commodity prices starting in 2014.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels---summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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