The piece is about the supposed economic boom times that are right around the corner, thanks to drilling for natural gas. As Davidson points out near the beginning, “The American steel industry recently received the economic equivalent of a gift from the heavens: natural gas extracted by means of hydraulic fracturing, or fracking.” And fracking will, as Davidson sees it, be of particular benefit to domestic industries:
Ed Morse, an influential energy analyst at Citigroup, argues that the natural-gas industry will bring around 3 million new jobs to the United States by the end of this decade. He also expects that fracking will add up to 3 percent to our GDP and trillions in additional tax revenue. Along the way, it will turn around perennial stragglers, like steel and manufacturing. For millions of workers, there could not be any better news.
What’s not to love, then? “Fracking, of course, is not universally embraced,” Davidson admits. There are questions about the chemicals used to extract the gas, he writes–but then quickly pivots to a discussion of how regulators have stepped up to take a harder look at the practice. Davidson admits: “Regulations are determined, in large part, by politics. And the politics of fracking are changing and are very likely to change drastically in coming years.” By that he means the “resource curse,” which involves regulations shaped more by the needs of a particular industry than, say, the public.
Many believe this already describes the oil economies of Louisiana, Texas and Oklahoma and, increasingly, North Dakota, where the fracking industry is entrenched. Politically and economically, it’s hard to argue with an industry that has helped keep the state’s unemployment rate at about 3 percent.
And once again: “There will be trillions of dollars of new wealth. Will environmental and health concerns have any chance against that juggernaut?”
That’s a good question, broadly speaking. More narrowly: How much did such questions factor into his report on fracking? Very little, from what appears on the page. There is no serious discussion of environmental costs borne by the public, and there is not one word about climate change–a pretty shocking oversight when one considers the potential ramifications of a massive new investment in a fossil fuel industry.
While many environmentalists work to stop fracking, Davidson has a different idea–he writes that the “best thing that any U.S. environmentalist can do is to start thinking like an economist.” He goes on to explain that Norway used its own oil/gas profits to create a pension fund, which then became a massive sovereign wealth fund. That’s one way to think like an economist, I guess–the consequences of fracking might be awful for the planet, but we’ll have quite a nest egg!
A different sort of economist might look at it differently–and might wonder, for instance, if fracking’s supposed jobs “boom” is for real. Economist Helene Jorgenson looked at this issue for Food & Water Watch; as she wrote (Beat the Press, 1/8/12):
Supposedly fracking can bring the economy out of its current stagnation by creating uncountable new jobs, without running up government deficits, and even save us from global warming in the process. So how come local residents and environmentalists oppose fracking? The short answer is that fracking does not create local jobs, it lowers property values, and pollutes the water we drink and the air we breathe.
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