Last week, the world’s leaders gathered on Earth Day to formally agree to the climate change deal hammered out last December. While there are still lots of questions about how effective the global agreement will be in limiting the damage from planetary warming, one message is clear; the world has got to move away from relying on fossil fuels – coal, oil and gas – to generate energy.
That international policy conclusion strongly bolsters New York State’s decision to ban hydraulic fracturing. Last year, the Cuomo Administration took the unprecedented step of banning the use of horizontal hydraulic fracturing – aka fracking – due to the potential environmental and public health damage that could result from the practice. At that time, New York State was the first state with significant natural gas reserves to ban fracking.
Since then, there has been a growing body of evidence that fracking does pose environmental and public health risks. And what has become clearer still is that the world needs to keep fossil fuels in the ground – not burn them so the resulting gases rise into the lower atmosphere and become a heat-trapping blanket.
According to the world’s experts, human activity in the form of burning fossil fuels is the leading contributor to the warming of the planet.
But the decision to ban fracking not only had an environmental benefit, but it appears to have had a fiscal one as well.
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Oil and gas prices have hit rock bottom and the job impacts are growing. The U.S. Bureau of Labor Statistics reported that employment in oil and gas extraction and support activities in the nation has shrunk by nearly one-fifth over the past year.
Jobs in the oil and gas extraction business has been reduced by 15,700 nationally while related employment in the mining sector has lost close to 100,000 jobs since January 2015.
The reduction in jobs has impacted states differently. States with less diversified economies have felt the impact of job losses most significantly.
Thanks to price declines, North Dakota’s extraction tax revenue fell from than $3.5 billion in 2014 to $2 billion in 2015, despite oil production remaining largely flat throughout 2015. The North Dakota governor has ordered state agencies to slash their budgets by 4 percent to close a $1 billion budget shortfall.
Alaska is now facing a $3.8 billion budget deficit, or two-thirds of its budget. As a result, its governor is proposing to, among other things, implement an income tax, cutting government spending, and raising other taxes.
Louisiana has announced across-the-board program cuts to deal with its estimated $900 million gap in the current fiscal year. Next year’s shortfall is expected to be more than $2 billion.
Oklahoma is contending with a $1.3 billion budget gap, nearly 20 percent of last year’s spending. As a result, state agencies are faced with cuts totaling 7 percent in annual state allocations. Public schools, for example, will have $110 million cut from their budget for the fiscal year ending June 30.
Of course a state like New York – with its enormous budget and complex economy – would likely have weathered this fracking economic collapse better than these smaller states. But had New York gone forward in 2014, it would have joined the market just as it was collapsing. And as everyone knows, you want to get into economic endeavors when they are taking off, not when the bubble is about to burst.
In retrospect, the Cuomo Administration’s fracking ban has turned out to have benefitted the state in important ways: it stopped drilling, which would have had to have had a serious environmental cost – just like any industrial-scale mineral extraction process; it kept the state’s finances from taking a significant fiscal hit and … it kept a fossil fuel in the ground. And in the ground is where fossil fuels must stay if the world has any chance of minimizing the damages caused by climate change.