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Tuesday, December 23, 2014

Fallout and Reaction From New York's Decision to Ban Fracking Covers Wide Range

In the wake of Governor Andrew Cuomo deciding to ban fracking - actually, to ban all oil and gas development - in New York, there has been no shortage of reaction and commentary on the thought (or in some opinions, lack thereof) that went into the decision and what the potential fallout will be.  While there may not seem to be any direct connection at this time between Cuomo's ban and Ohio's Utica shale activity, the future may reveal otherwise.  The decision has definitely emboldened and fired up activists who feel responsible for influencing Cuomo.

So, here is a sampling of what people are saying about the New York ban.

From Powersource:
New York and Pennsylvania share a border, but on shale gas policy the states are separated by a gulf. 
The breach widened last week when New York Gov. Andrew Cuomo’s administration announced that state will ban fracking, citing uncertainty about the health risks posed by the oil and gas extraction process. 
In Pennsylvania, where elected officials from both parties embrace shale gas development, government leaders are still debating whether to fulfill a three-year-old recommendation for how to study the potential impact of shale gas development on public health. 
Gov. Tom Corbett’s Marcellus Shale Advisory Commission urged the state Department of Health in 2011 to create a health registry to track the well-being of people who live near natural gas drilling sites over time. The project was not funded, and the registry was never created. 
Could the starkness of New York’s warning influence policy in Pennsylvania? 
“I don’t put a lot of stock in the New York analysis,” said Drew Crompton, chief of staff for state Sen. Joe Scarnati, R-Jefferson, the Senate president pro tempore.
From Forbes:
New York has issued a moratorium for hydraulic fracturing in the portions of the Marcellus Shale that fall within its borders, but the state is benefiting economically and environmentally from the fracking going on in neighboring Pennsylvania, as NPR reported. 
New York City, for example, has rolled out a program, “NYC Clean Heat,” to encourage building owners to switch from heating oil to natural gas. One building owner told NPR that by switching, he expects to reduce his building’senergy costs by 50 percent. 
The abundance of natural gas produced by fracking in places like the Marcellus has driven down prices and made those savings possible. The irony, as NPR points out, is that most New Yorkers oppose fracking:
From National Review:
It’s hardly surprising that a liberal Democratic governor in one of America’s most liberal states chose to ban fracturing. Indeed, in most liberal/left groups, hatred of the oil-and-gas sector isn’t just popular, it’s a membership requirement. On Thursday morning, Dan Henninger of the Wall Street Journal put it exactly right when he told Charles Payne on Fox Business that “the Democrats have been captured by the Greens.”

New York has had a moratorium on hydraulic fracturing for years. To change that policy now, after all the campaigning that has been done in the state by environmental groups, would have been a truly surprising move. That Cuomo formalized that moratorium and made it official is not surprising in any way. 
As to the significance of the move, it has made environmental groups giddy and added a tiny dollop of political theater to the discussion about domestic oil and gas development. It’s also clear that the move is negative for the economy of upstate New York. In 2011, Timothy Considine and two colleagues were asked by the Manhattan Institute (where I’m a senior fellow) to estimate the economic opportunities of shale development. Considine’s report found that shale-gas drilling in New York would spur more than $11 billion in economic output and create as many as 18,000 jobs. Now, thanks to Cuomo’s move, the possibility of that economic development — along with those thousands of jobs — has vanished, probably for decades.
From The Observer:
State Sen. Cathy Young, R-C-I-Olean, said Cuomo’s ban would perpetuate rural poverty. 
“It’s a punch in the gut to the Southern Tier,” she said. “The governor has a moral obligation to explain to the people of our region how he will alleviate rural poverty. Families desperately need jobs and economic opportunity, not government handouts.” 
She said young New Yorkers are leaving in droves because they feel they don’t have a future locally. 
“Our rural communities are dying a slow, painful, poverty-stricken death and hope is scarce,” she said.
From JDSupra:
The remainder of the 184-page report refers to many unpublished and non–peer reviewed reports, at least some of which were funded by groups opposed to the natural gas industry. On the other hand, the NYSDOH report lists but does not discuss nor give credibility to recent peer-reviewed and published studies. For example, the NYSDOH bibliography lists the 2014 U.S. Department of Energy’s National Environmental Technology Laboratory (NETL) study that used tracers to conclude there is no evidence of gas or brine migration from Marcellus Shale wells. However, nowhere in the NYSDOH report is the NETL study discussed. Similarly, the report mentions the 2013 Fryzek retrospective assessment, which concluded that no increase of childhood cancers occurred after HVHF commenced, but NYSDOH disregards that work, claiming there is “uncertainty about the strength of the study conclusions.” Instead, for example, the NYSDOH gives weight to the Southwest Pennsylvania – Environmental Health Project’s unpublished and no-longer-available website presentation, which describes self-reported symptoms from a small number of individuals who reported these claimed symptoms to a non-healthcare organization. These examples are typical of what can be found in the NYSDOH report and its conclusions. Thus, the decision to impose a ban on the unconventional shale industry in New York would appear to be legally questionable to the extent that it relies on a concern for what might happen as opposed to the great weight of information and evidence that these concerns are not justified. 
Impact 
Ultimately, the ban is expected to be overturned. The owners of oil and gas rights have a basis for claiming that they are being deprived of legitimate economic interests without necessary governmental basis for this restriction. Those opposed to unconventional shale development in other areas of the country will attempt to use the NYSDOH report to further their interests, but this will have little impact because reviewing courts and governmental agencies will have access to the underlying studies and will have the ability to give these studies appropriate weight. Thus, until the ban is overturned, exploration and production of the vast unconventional shale deposits in the United States and elsewhere will continue, and New York will have to wait for its opportunity.
From Common Dreams:
In the wake of New York's victory against fracking, many regions in North America faced with growing climate threats seem ready to follow the state's lead and ban the drilling practice altogether. 
Just days after Governor Andrew Cuomo passed a moratorium on fracking following an intensive environmental activism campaign, the Canadian province of New Brunswick introduced its own temporary ban on the controversial method of drilling. 
New Brunswick Premier Brian Gallant, who promised a moratorium on fracking during his campaign, said the halt would be lifted for companies who meet certain conditions, which include a consultation process with First Nations tribes, a plan for waste water disposal, and credible reports on the health and environmental impacts of the practice. 
New York's resolute stance against fracking is particularly momentous because the state sits atop a large portion of the Marcellus Shale, a methane-heavy formation that has been targeted by the energy industry for drilling. Legalizing the practice would have been a financial boon for the state; by prioritizing the environment, Cuomo "sets a model for what should happen around the country," Alex Beauchamp, Northeast Region Director of Food & Water Watch, told Common Dreams.
From the Associated Press:
While environmental groups are doing a victory dance over New York’s decision to ban fracking, farmers such as apple grower David Johnson are grieving for dashed hopes and dreams. 
“I’m devastated,” Johnson said after Gov. Andrew Cuomo’s health and environmental commissioners announced Wednesday that they were recommending a fracking ban. “I have concerns about how to continue this farm that’s been in the family for 150 years.” 
Energy companies denied the chance to drill in New York can simply raise their rigs in other states. But landowners in the state’s Southern Tier region who had hoped to reap royalties from gas production don’t have that option.
From CNN:
However, I am reflexively hostile to deception, especially when undertaken by people who cloak themselves in the mantle of science. And that's exactly what is happening here. 
While science is always a subject of continuing inquiry, the strong consensus of research on hydraulic fracturing is that overall, it is good for the environment, the economy and our geopolitical position. The United States has seen dramatic reductions in national carbon dioxide emissions largely as a result of hydraulic fracturing, which allowed natural gas to become cheap and abundant, and mostly displacing dirtier, higher-emission coal in the generation mix. Hydraulic fracturing, and the similar techniques used for "tight oil" drilling, have actually allowed the United States to become the world's leading oil producer in 2014
The economics of the fracking revolution are also overwhelmingly positive. IHS, perhaps the most respected independent energy consultancy, says the industry will be able to support 3.3 million jobs, adding more than $125 billion to state coffers through state tax revenues by 2020. By 2025, the average family could be saving $3,500 per year due to hydraulic fracturing, a staggering figure in a country with a median family income of just $52,000.
From the New York Times:
Despite the potential economic benefits of drilling for natural gas, the governor’s environmental commissioner, Joe Martens, and his health commissioner, Dr. Howard Zucker, concluded that the health and environmental risks were too high. Cuomo, for his part, claimed — implausibly — that he had played no role in the decision. “I am not a scientist,” he said, maintaining that he had merely taken the advice of his experts. 
A few hours later, a state board approved the building of three casino complexes, the largest of which would be located in the old Catskills borscht belt. After the announcement, Cuomo put out an ebullient statement saying that these projects will “create thousands of local jobs, drive economic development in surrounding communities,” et cetera. 
Anyone who cares about the economic viability of New York State should be troubled by these two decisions. It is fracking — despite risks — that has the potential to boost struggling communities, by providing well-paying, middle-class jobs. Casinos, meanwhile, are a road to nowhere. The Cuomo administration got it exactly backward.
From the Houston Chronicle:
While it bans fracking, New York will undoubtedly continue to belch forth pollutants from the streets of Manhattan and other cities. Neither the governor nor the public health officials have taken steps to lessen the state's consumption of fossil fuels. It may even double down on its hypocrisy of mooching the benefits of cheap energy from neighboring Pennsylvania, which has shown far more pragmatism in its energy policy than Cuomo has with his political pandering. 
The Marcellus is primarily a natural gas formation, and natural gas prices remain depressed. By banning fracking, New Yorkers have basically assured that additional supplies won't be coming to market and depressing prices further. Cuomo may have inadvertently provided price supports for the energy companies he's trying to keep out of the state. In theory, his constituents ultimately could pay more to heat their homes than they would have if he had lifted the moratorium. 
Either way, New Yorkers will continue to enjoy lower prices for gasoline and continue to switch from heating oil to cheaper natural gas thanks to fracking in other states. Cuomo's decision to ban fracking simply underscores the point that New Yorkers remain blissfully oblivious to the tradeoffs they make every day when it comes to energy. No wonder my head hurts every time I go there.

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