MDN reader, friend and contributor Chris Acker provides the insightful commentary below in response to (and building on) our article of a few days ago, titled: 18 PA House Democrats Dissent from Party’s Vote for Frack Moratorium.
Chris delves into the economic apocalypse that would happen should PA Democrats gain power again in the next election and fulfill their promise of enacting a statewide moratorium/ban on drilling. It is, as Chris points out, a true nightmare scenario:
Speaking of clever, lets say PA Dems actually placed a “moratorium/ban” on fracking in the Commonwealth. What would happen? First, it would place companies which generate the majority of their revenues from PA production–Cabot Oil & Gas for instance–on the path to bankruptcy. Cabot, currently with a market capitalization of $16 billion (more than Chesapeake Energy!), would see most of that evaporate, severely hurting shareholders. Along with Range, EOG, Chesapeake and hundreds of other companies operating in PA, maybe $100 billion in market value would be destroyed overnight.
As companies halt operations, likely 200,000+ direct and indirect jobs would be lost in a matter of months. Unemployment claims could bankrupt the state system while the PA unemployment rate would spike by several percentage points. PA would face an unprecedented financial crisis. Not to mention losing $200 million per year in slush funds–I mean, impact fees. The Sunoco refinery revival in Philly would be placed in jeopardy while any East Coast LNG export facilities would cease to be viable. No new leases or additional royalties to landowners.
Dwindling PA production spells the end of hopes for U.S. energy independence. Natural gas prices increase, homeowners pay more for heat. Utilities switch back to cheaper coal, adding to pollution and carbon output. Construction of several highly efficient combined-cycle power plants fueled exclusively by local gas would not be possible. Market incentives to fuel vehicles with natural gas would diminish as prices rose and supply diminished. All the petrochemical facility plans in the Northeast are placed on hold as well as many in the Gulf Coast area as supply uncertainty takes hold.
Drilling moves to WV, OH and elsewhere, but lost PA volumes can not be made up with smaller plays. In sum, personal misery and financial disaster all around – at individual, local and state levels. National and international implications as well. “Way to think it through” all you PA politicians in favor of a fracking ban.
Meanwhile, the Saudis go laughing all the way to the bank. “We are blessed that Pennsylvania Democrats are so stupid in so many ways,” they would gloat.
Well said Chris. Well said.