Avoiding Shale Energy Boom/Bust Cycle in Ohio

Two Ohio State University graduate students, under the watchful eye of an advisor, have authored a policy brief titled “Making Shale Development Work for Ohio” which aims to provide politicians with guidance on how to avoid the so-called boom/bust cycle that shale energy “may” create in Ohio (a full copy of the brief is embedded below).

The grad students say Ohio needs to take steps now to ensure the state benefits from the shale energy boom in both the short- and long-term. Failure to do so, according to the brief, will “likely” have long-lasting negative effects. Among the brief’s recommendations are:

  1. Short-term costs of extraction (especially the hidden costs) are addressed and compensated for. This ensures infrastructure, amenities and other public service levels are maintained or even improved.
  2. Long-term tradeoffs are countered to maintain or increase levels of capital and economic diversification.
  3. Oil and gas industry taxes are set appropriately to cover the short-term and long-term costs and trade-offs of a natural resource boom.
  4. Good governance is critical to ensure public policies and expenditures from the tax revenue are effective and efficient – supporting all businesses and industries.

It seems to MDN that when reading through the extended explanations of the prescriptions above (read the brief for yourself, look at page 12 of the report—which is page 15 in the PDF document), you can summarize the prescriptions in two phrases: higher taxes, more regulation. Perhaps that’s a gross simplification—a lot of work has obviously gone into this brief. But at the end of the day, that’s exactly what the grad kids are recommending.

While scanning through this document, MDN found the following helpful table showing the amount of acreage held by drillers, and the number of permits and wells (as of April).

Utica Shale Land Holdings by Driller