What the frack? Gas extraction costs stay local while benefits leave town

Policy-makers in cities and towns across the United States have been fighting over the shale gas extraction controversy, often referred to as "fracking." While some researchers claim that shale gas development brings jobs and economic growth to local regions, others have documented serious health risks and environmental damage caused by extraction activities. Fracking activities are not directly subject to any federal laws and are not always strongly regulated by state governments. This leaves it up to municipalities and local governments in certain states to make decisions about how to regulate drilling activities. Regardless of who regulates fracking at the local level, there can be significant discrepancies between who receives the benefits from fracking and who pays the costs.

In a study published in Ecological Economics, Matthew Fry and a team from the University of North Texas focused their research on how monetary values from shale gas production from the city of Denton, Texas, are distributed. Denton is located on top of the Barnett Shale, the oldest and most heavily exploited shale deposit in the United States. Denton was one of the first municipalities to host fracking activities. The researchers collected information on mineral property appraisals, mapped drilling sites, and interviewed local homeowners.

At least 68 percent of Denton's mineral values are realized by people and companies based outside of the city, the researchers found. This means that most of the direct profits and monetary benefits from shale gas extraction do not directly support Denton residents. The authors point out that none of the companies with drilling operations in the city are based in Denton and that shale gas mining jobs only account for 0.27 percent of employment. This tells us that fracking is not significantly contributing to local employment.

The researchers also investigated legal and procedural issues in Denton. Most residents are excluded from decision-making about where drilling occurs. Residents also are not informed about the potential risks of living near an already-existing well. Permissions to drill wells are based on private agreements between mineral property owners and mineral extraction companies. Landowners don't necessarily own the minerals under their land. The rights of mineral owners to access mineral deposits are consistently favored over surface rights of landowners throughout the U.S. In Denton, local residents petitioned their municipal government to better regulate shale gas drilling. However, even with increased regulations, loopholes and exceptions still allow wells to be drilled close to houses.

The research presented in this article challenges the idea that fracking activities bring jobs and economic growth to locales with shale gas deposits. Denton, Texas, is a textbook case study for the dramatic inequalities that can result from policies that favor oil and gas production without taking into account local effects. Local residents are faced with shouldering the burdens of health and environmental impacts from fracking, but reap almost none of the benefits.