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November 22, 2014
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Local drilling costs unknown; Delaware drilling commission explores economics


In contrast with natural gas industry claims that Marcellus Shale drilling brings jobs and revenue to th e localities in which it occurs, economist Jannette Barth, Ph.D., owner of J.M. Barth & Associates, Inc., asserted that local government costs associated with natural gas extraction have yet to be determined. At the invitation of the Town of Delaware Gas Drilling Commission, Barth addressed commission members and the invited public at the commission’s January 7 meeting in Hortonville.

Barth prefaced her remarks by introducing herself and outlining her credentials and experience, particularly that experience concerned with local government economic impact studies.

A graduate of Johns Hopkins University, Barth earned both her Master of Arts and Ph.D. degrees in economics from the University of Maryland-College Park. Barth has served as the chief economist of the New York Metropolitan Transit Authority and as a member of the commission studying the economic impact of the 9/11 terrorist attacks. Her interest in the economic impact of natural gas extraction, however, hits much closer to home. Barth is a landowner in Delaware County.

At the request of concerned friends and neighbors in Delaware County, Barth began exploring the economic impact of natural gas extraction on the communities where it has occurred. Her initial findings were, in her choice of word, “appalling.” An almost complete absence of data on the costs of natural gas extraction to local governments has made it impossible to develop a reliable cost/revenue ratio, thus calling into question gas industry claims that local revenues derived from natural gas extraction will far exceed expenses associated with it.

This absence of cost data has prompted Barth and other economists to study areas that were subjects of natural resource extraction that included coal mining, oil drilling, shale mining, etc. What they discovered were boom-bust cycles that resulted in long-term economic hardship for the communities involved. Some of the most impoverished areas in the United States today, Appalachia among them, were once booming natural resource extraction sites.

Although the reasons for these boom-bust cycles are numerous and complex, the processes involved in them are fairly simple and common. Gas companies and their subcontractors lure skilled local workers away from existing small businesses with the promise of higher wages and better benefits than can be afforded by the small businesses. Many of the small businesses then collapse under competition for skilled workers.

The extraction process itself often discourages competing industries such as tourism, hunting, fishing, outdoor recreation, agricultural, dairy, and livestock farming. Additionally, if ground water contamination occurs as a result of fracking, those competitive industries may be curtailed altogether, their produce irrevocably compromised by contamination.

When extraction is either complete or abandoned, the community is left with few existing businesses and depleted natural resources incapable of supporting diversified industry.

Because the drilling commission meeting was forced to adjourn early, Dr. Barth was invited to speak again at a future date yet to be determined. She was also asked if she would be willing to undertake an economic impact study for the Town of Delaware. She replied that she would be willing to do so, but that such a study would necessarily involve a team of economists, each with a particular expertise.

In Dr. Barth’s estimation, such a study would be prohibitive in cost for a municipality at the town level. She emphasized that the cost of such a study should be borne by the state and that the New York State Department of Environmental Conservation has already been charged with that task.

To date, that agency has not completed its task, citing the extreme difficulty of obtaining accurate data for such expenses as road maintenance, volunteer firefighter and ambulance personnel and equipment, healthcare facilities, police and criminal justice system, and regulatory oversight of gas production.