Opinion: Columnists

Fracking could create new wealth for New York as it has for Pennsylvania

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Opinion,Diana Furchtgott Roth,Columnists,Environment,Energy Department,New York

Energy companies in Pennsylvania have been extracting natural gas through hydro-fracturing ("fracking"), but a state moratorium in place since 2010 has prohibited companies from doing the same thing in New York.

Later this year, New York's state government will decide whether it will permit fracking, or, instead, turn its current moratorium into a permanent ban. The government should lift the ban.

In a new analysis of data from Pennsylvania, where nearly 5,000 fracked wells have been drilled since 2002, I show that counties with such operations have performed better in terms of income growth and employment than those with none.

The more wells a county contained, the better it performed. Using the Pennsylvania data to project fracking's effect on New York counties, I find that the incomes of those who live in the 28 New York counties above the Marcellus Shale have the potential to expand by as much as 15 percent over the next four years -- if the state's moratorium is lifted.

New York state residents would lose by enacting zoning laws against fracking, just as they are losing through the moratorium.

Pennsylvania counties with fracked gas wells have performed better across economic indicators than those without. Economic performance correlates with a county's number of such wells, and therefore is best among the counties most prolific in fracking.

Between 2007 and 2011, per capita income rose by 19 percent in Pennsylvania counties with more than 200 wells, by 14 percent in counties with between 20 and 200 wells, and by 12 percent in counties with fewer than 20 wells.

In counties with no fracked wells, income went up only by 8 percent. It is important to note, too, that counties with the lowest per-capita incomes experienced the most rapid growth.

Employment growth in Pennsylvania counties, measured as the percentage change in jobs from 2007 to 2011, tells a similar story. Counties with more than 200 wells added jobs at an average rate of 8 percent.

None of the six counties with more than 200 unconventional wells failed to add jobs in the 2007-2011 period, despite the economic turmoil that gripped the rest of the state, and the nation, during this period.

Pennsylvania's counties are narrowing the economic growth rate gap that existed between them and New York's counties, and this is most pronounced in counties where many fracked wells have been drilled.

Income of residents in the 28 New York counties above the Marcellus Shale has the potential to expand by 15 percent or more over the next four years if the state's moratorium is lifted.

A New York county that permited the drilling of a mere 20 wells could, in a four-year period, see per-capita income rise 3 percent more than it would have if no wells had been drilled.

If all New York counties above the Marcellus Shale were to pursue this course, they could collectively have $4.2 billion more in income just in the last year of that four-year period.

On the other hand, drilling 400 wells in a county, which some Pennsylvania counties have done in a similar time frame, could raise incomes by more than $8 billion, or 6 percent, with commensurate increases in statewide gains. Tax revenues would increase with incomes.

In weighing their choice, New York government and city officials have an abundance of useful data from neighboring Pennsylvania. If New York lifts its moratorium, companies will be drilling the same type of wells to exploit the same subterranean source of gas.

Pennsylvania's experience is a good guide to what would happen in New York.

Washington Examiner Columnist Diana Furchtgott-Roth (dfr@manhattan-institute.org), former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research.

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