Anti-Drilling Objection: Shale Drilling Causes Boom & Bust

boomtownTwo and one half years ago MDN editor first heard about “boomtowns” at a talk by Cornell Professor Tony Ingraffea. Ingraffea is a well-known anti-driller who traipses hither and yon to spread the anti-fracking message—from the halls of Congress to local town libraries to college classrooms with young, impressionable minds. That night, Dr. Ingraffea talked extensively about how local towns in the Western U.S. went through a cycle of building up (or “boom”) due to energy exploration, and then almost overnight went “bust” once the energy was mined and the companies left town. It was quite a horror picture he painted (see this MDN story recounting Ingraffea’s talk).

MDN has heard the same argument on and off over the years since. The latest example is a story published yesterday titled, “Will Shale Create Ohio Ghost Towns in 2040?” Every time MDN editor hears that argument it makes us angry. Here’s why…

The article from yesterday spins the boomtown argument this way:

A report from Citibank stating that Riyadh [Saudi Arabia] may eventually start importing oil in the next 20 years, however, serves as a stark reminder that resources like oil and natural gas aren’t renewable. While the oil and natural gas boom in the United States may last a generation, every well, no matter the prospects, dries up.*

The argument that Ingraffea and others make is this: Shale gas, indeed all fossil fuels are not “renewable,” therefore they will eventually run out (i.e., we shouldn’t be using them in the first place), and in particular, they will run out in specific locations in a relatively short period of time—within a generation after drilling is started. Ergo, we should not bother to drill in the first place.

That logic is faulty. We’ll illustrate with a real-world example.

MDN’s HQ is the Binghamton, NY area, also known as the Triple Cities, so named because of the neighboring communities of Johnson City and Endicott. In 1854 the Lester Brothers Boot and Shoe Company started up in this area. It later became the Endicott-Johnson Corporation, and by the roaring 1920s, “E-J” as it was known, employed some 20,000 people making shoes. The number of people working at E-J in the 1940s grew—and during the war years the company and those many thousands of workers produced 52 million pair of shoes per year. Astonishing.

The prominent head of E-J, George F. Johnson, is a legend around these parts, known for his magnanimous character and the way he took care of his employees. There are still houses standing in Johnson City (named after him) even today, originally built by Johnson for his workers. It is said many immigrants getting off the boat at Ellis Island knew one phrase in English: “Which way E-J?” The company was, by all accounts, a huge success.

How many people are employed at E-J today? Zero. None. The old factory is shut down and is now a brownfield site, contaminated by chemicals used for years in the process of tanning animal hides used to make shoes. The company was sold and all of the shoe manufacturing went to other countries. A sad conclusion to a once-great company.

A second example is IBM. You may not know this, but IBM started in 1911 as the Computing Tabulating Recording Company (CTR) through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company. It later adopted the name International Business Machines (IBM) in 1924. Oh, and CTR-later-IBM started in Endicott, NY.

In it’s heyday of the 1970s and 1980s, IBM employed over 15,000 people in Endicott and surrounding locations, along with hundreds of thousands around the world. IBM was one of the first companies to provide life insurance, health insurance and paid vacations for its employees. Until just 10-15 years ago, IBM never had a layoff—ever!

Last year IBM was the #2 employer in the U.S. by number of employees. How many work at IBM in the Endicott/Binghamton area today, just 20 years after its heyday around here? A few hundred. MDN editor Jim Willis has lived through the decline of IBM employment in this area and it has been devastating. Perhaps the biggest toll it has taken in going from 15,000 to a few hundred has been the damage to our collective psyche. The feeling of hopelessness and that this area has “seen its better days.”

Boom and bust? You bet—right here in Binghamton. With both E-J and IBM this area has been rocked by first a buildup and later a teardown.

If we could roll the clock back to around 1900 and with the advantage of foreknowledge, knowing what would happen 75-100 years later, would we have changed the course of history? Would we have said “no thanks” to George Johnson and later on, to Thomas Watson? No way. There is a legacy in the Binghamton area today—people (the descendants of those workers) from all ethnicities and all walks of life—we would not have without the benefit of those boom years.

It’s exactly the same with an energy boom.

With knowledge of what may happen in the future, can and should we plan for later, after the energy companies leave? Absolutely. Those discussions should be happening now—plans to sock away some of the money that will arrive in the coffers of schools, towns and counties. Landowners need to do the same kind of wealth planning.

But does that mean we would rather not have the energy companies here at all, given that a boom will “only last” for the next 30-40 years? No way! We want them here! We want the drilling, for however long it will last. We want the jobs. We want the money that will flow into our communities.

To say “Don’t come because it won’t last” is just plain stupid. No job, no opportunity, no anything lasts forever. Demanding that drilling must last “forever” shows a crack with reality—an attitude of people living in a pretend universe.

So while drilling for shale gas and oil is here, let’s grab it with gusto and do the best we can with it. And when it’s gone, we’ll look back with nostalgia and longing, and perhaps with a few regrets for how we might have handled it differently. To say we should never even do it in the first place because it won’t last? Exasperatingly dumb.

* (Oct 25, 2012) – Will Shale Create Ohio Ghost Towns in 2040?