Bernie Sanders’ Fracking Ban Is an Economic Disaster for Energy-Producing States

Isaac Orr
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Posted: Feb 17, 2016 12:01 AM
Bernie Sanders’ Fracking Ban Is an Economic Disaster for Energy-Producing States

Many energy-producing states are currently struggling in the wake of falling oil and natural gas prices. Thousands of people are losing their livelihoods in the energy sector, and lower severance tax payments are projected to produce numerous state budget shortfalls, which could end up reducing state spending on social programs.

But as bad as the situation in many states now looks, it would be far worse if Sen. Bernie Sanders (I-VT) gets his way and ends up successfully banning fracking, a plan he recently proposed as a way to reduce the carbon dioxide emissions Sanders says is causing global warming.

A ban on fracking would be disastrous for everyone. It would drive up energy prices (don’t forget gasoline cost more than $4.00 per gallon a few years ago), and it would cripple the economies of numerous states, including New Mexico and Ohio.

New Mexico has the fifth largest proven oil reserves and the seventh largest reserves of natural gas in the nation, and many of these sources are accessible only through fracking. Oil and gas production are vital to the economy in New Mexico. The average annual wage paid in the energy industry is about $63,000, more than 57 percent higher than the average wage in the state. Nearly 22 percent of New Mexico’s population is living beneath the poverty line, a figure that’s sure to decline should fracking be banned.

It’s not just about jobs; fracking policy also affects children. Educational institutions—from K–12 schools to junior colleges and research universities—are the biggest benefactors of New Mexico’s energy revenues. Severance taxes collected from oil and natural gas developers supplied more than 30 percent of the state’s general fund in 2013, and it would be much more difficult to pay for educational programs if a major source of income for schools is banned.

Ohio is less reliant on energy production for its overall economic activity than New Mexico, but fracking has breathed new life into Eastern Ohio, an area of the state that has struggled for decades and has endured high rates of unemployment and poverty.

Youngstown, Ohio, for example, has the highest poverty rate of any city in the state. More than 40 percent of the city’s population and nearly 59 percent of the city’s children live in poverty, but fracking is starting to move the economy in the right direction. An increase in oil and natural gas production from the Utica shale in Eastern Ohio is providing employment opportunities for people living in Youngstown. Thanks to low natural gas prices caused by fracking, steel plants, once a staple of Ohio’s economy, are beginning to return to the state.

Vallourec, a French manufacturer of steel pipes, recently opened a plant in the state, creating 350 jobs. A new multibillion-dollar steel plant is also now in the works, scheduled to be built in downtown Youngstown. Local pipefitter unions reported full employment in 2014, up from 40 percent unemployment just a few years before. The increase is largely the result of the growing energy industry, but that trend would suddenly stall if Sanders’ plan to stop fracking becomes a reality.

The boom-and-bust nature of the energy sector creates challenges for people during down cycles, such as the one we are currently experiencing, but it also creates tremendous employment opportunities for people when production is high. Critics of fracking have often dismissed fracking-related jobs because they say they are not high-status occupations, but these jobs provide real wages to real people and better education for children.

The best social programs aren’t welfare policies; they are high-paying jobs, and that is exactly what fracking provides to thousands of blue-collar Americans. Oil and natural gas development funds schools and helps lift children out of poverty. That’s a future worth fracking for.