August 27, 2012

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By Andy Hirsch

LEWISBURG, Pa. — The United States is in the midst of an energy boom. The exploration of shale plays rich in natural gas and oil is transforming communities across the country. But the true economic consequences of the ongoing energy exploration and its long-term effect on local economies where the drilling occurs is unclear, according to Nancy White, a professor of economics at Bucknell.

"I think it's important for us not to confuse local economic development with local economic growth.  Economic growth typically means building more, producing more, more jobs, more aggregate income and more tax revenues. But on their own, those benefits can be short-lived unless the growth period includes careful planning for when the oil or gas is gone," White said.

"In smaller communities that are remote from growing cities, true economic development calls for enhanced diversification of industry for the future rather than focusing exclusively on the current needs of the industry. Local communities that come out well during an energy boom are the ones that use the growth period to maintain or improve quality of life and make fiscal decisions that are sustainable."

Hoping to help address that problem, White recently organized a consortium of economists and regional scientists who have been studying the economics of the boom in hydraulic fracturing, or fracking, the method used to extract the gas and oil from the shale. Nearly three dozen researchers from Cornell University, Ohio State University, Rutgers University, Penn State University, West Virginia University and other institutions recently gathered at Bucknell to focus on developing independent research on the economic and community impacts of shale energy production.

"Much of the research that is out there in the public comes from studies backed by either the energy industry, or opponents of fracking," said Mark Partridge, an economics professor at Ohio State University and one of the keynote speakers at the events. "Those certainly are not the best sources of an industry's actual economic impact. In serious research we need to use peer review to weed out poor studies."

White agreed, and said the public discussions surrounding fracking need to be better informed. "The public perception is framed as jobs versus the environment. People sometimes say, "I am concerned about possible effects on water or air, and I don't like the traffic and the noise, but it creates jobs." That is not the way that economists think about natural resource extraction. We evaluate costs and benefits. Jobs are a cost. Noise is a cost. The issue for communities with natural resource extraction is that the benefits are dispersed to people all across the U.S. and the world while the costs are localized," said White. "We want to build a more comprehensive understanding of what is going on for ourselves and our communities."

After spending the day analyzing a variety of issues ranging from the shale industry's impact on municipal roadways to its affect on housing values, the group of researches gathered to discuss ways to move forward.

"This is a great start," Partridge said. "One of the gains of bringing all of us together is we're all working on similar issues, and now we are developing a network of people we can work with in trying to do good, credible research."

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