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Life in the Gas Lane: Living with Drilling, Part III

Sorry for the delay in posting. This should have appeared on Tuesday, but I've been a little busy with a research paper due next week.

Read the previous posts: Part I, Part II-a, Part II-b, and Part II-c.

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How's this economy working for you?

Okay, so drilling was supposed to bring jobs and money into the area, we'd all prosper, and life would be an idyllic Mayberry paradise full of Godiva chocolate and French champagne... or something. Reality, as it turns out -- gee whiz! -- is a whole lot different.

Jacquet's study [PDF] shows that the winners and losers in any rural area where energy drilling occurs are almost always the same, regardless of what area of the country they live. Those who benefit (among local residents) are: landowners and landlords; owners and employees of direct support services (water haulers, etc); and owners of businesses patronized by gas workers.

Those who will see only negative economic impacts are: renters; low-wage employees of non-gas businesses (especially national chains like Kmart or McDonald's); and those on fixed incomes.

Economically, a drilling area can go one of two ways during a boom: either becoming sharply divided into haves and have-nots, with the former raking in dough and the latter continually struggling (and failing) to survive, or -- with proper planning by state and local officials -- still a sharp divide in haves and have-nots, but with support systems and services in place to aid those struggling to survive.

Those with incomes that, prior to drilling, were below the poverty line are almost immediately thrown into catastrophe as a result of increased housing prices. Those with incomes above the poverty line, but below the median -- in other words, blue-collar workers and small business owners -- quickly follow. Homeowners in all groups see a windfall as the potential for gas drilling causes an increase in property values. However, once drilling is in progress and environmental impacts are seen, property values begin to fall, often dramatically. In addition, as the pace of drilling and the cost of living increase, more and more of those on the margins are pushed out of the area.

The problem is that every "good" drilling brought with it has a nasty side effect, or several, on the low- and moderate-income families living here. There are businesses that are booming, businesses that might have closed without the patronage of the gas industry. There are new businesses being opened to provide services to the industry. Many farmers who struggled to hold on to their land are able to keep it, while reaping royalty income that far exceeds the income farming provided.

Unfortunately, these boons to the economy of Bradford County are not universal. Employees of the Dandy Mini-Marts, the national chains like McDonald's or Kmart, and businesses with no gas industry links are still working for less than a living wage -- even as customer loads and cost of living increase dramatically.

Many people with low or fixed incomes who signed gas leases for small parcels failed to understand the impact on their tax return. I've had several people in my tax office the past two years who were stunned to learn that -- despite their low income -- they no longer qualified for the Earned Income Credit, and -- worse -- actually owed money.

For families on the edge, the impacts are devastating. There's higher demand on state and county social services. Applications for food and housing assistance are skyrocketing -- at the same time as human services budgets were cut.

At this time, the most serious impact is on housing. It's nearly impossible to find available, affordable rentals; rents have tripled and quadrupled over the past two years. Many landlords stopped signing or renewing leases with locals because they can make more off the gas companies.

When the Pennsylvania Senate's Urban Affairs & Housing Committee held a hearing in Bradford County, housing was one of the main issues discussed:

The houses that would typically rent for $600 per month in Bradford and Lycoming counties are now renting for $1,000 to $1,200 per month, said [Robin] Fiester, who is president of Robin Real Estate, which has offices in Eagles Mere and Muncy.

Apartments in Bradford and Lycoming counties "that typically rent for $375 per month are now renting for $800 per month," she said.

And actually, those numbers are already out of date. The average house is renting for between $1800 and -- as seen in yesterday's classifieds -- $3,000 per month, while apartments are renting for between $800 and $1300.

"The influx of gas workers who are willing to pay rents far exceeding the fair market rent for this area (of Pennsylvania) has caused rents for decent housing to more than triple," testified Douglass Johnston, chief executive officer of Futures Community Support Services, which has its headquarters in Towanda. "Rents have increased to the point where even moderate income families cannot afford housing."

[...]

In Bradford County, due to problems finding affordable housing in Bradford County, increasing numbers of people are trying to find housing in the local publicly operated housing complexes for senior citizens and disabled people, said Bill Farley, executive director the local Area Agency on Aging. And more local people are trying to get into the Section 8 Rental Assistance Program, which assists low-income people, he said.

[...]

"The potential exists that more of our frail and low-income population will join the ranks of the homeless in rural Pennsylvania," Farley said. [my emphasis]

As a result, above-poverty-line renters are struggling to meet those rents, and we have a huge number of elderly, disabled and/or low-income renters who are finding themselves with nowhere to go, and homelessness is a growing problem.

Residents aren't the only ones affected. If you're just traveling through the area, forget about finding a motel room. Because the gas companies reserve blocks of rooms for months at a time, there is no room at any of the inns.

Now, without a doubt, this is great for the motel owners and the extra staff they've hired, but it does cause some problems. The Homeless Assistance Program run by Futures, Inc. has found itself unable to help those in need of temporary shelter. When I interviewed Douglass Johnston last October for one of my classes, he said that, at times, they've searched as far as Elmira and Corning, NY to the north and Tunkhannock to the south seeking rooms for homeless clients -- and found nothing available.

The lack of rooms impacts another area previously important in Bradford County: tourism. We aren't Disneyland or even Six Flags, but over the past few years, our tourism industry has been growing, especially with the promotion of our county as a destination for hunting and fishing, as well as seasonal activities and attractions like hiking and camping, the Troy Fair, or fall foliage tours.

Who wants to take a scenic country drive to see the changing leaves when they have to compete with big trucks for the road? Who wants to hunt in an area where drilling is occurring? Who will visit our historical or cultural attractions, or simply come home to visit family, when they can't get a motel room? While drilling may bring great benefits to the area, it's going to severely cripple, if not kill, the tourism industry.

We're also seeing increases in the cost of goods and services at the locally-owned businesses. Not large yet, but noticeable. (Example: A pot roast dinner at my favorite restaurant went from $9.99 to $12.99.) This can be expected to continue as merchants cultivate a drilling clientele that can, on average, afford higher prices.

Again, this all ties together. Increases in one area drive increases in another, impacts in one area cause impacts in others, and so on. My opinion is that all this will worsen in Bradford County over the next two to five years. And we have to wonder what will happen when the boom goes bust.

In Part IV, I'll make a few predictions about the future in Bradford County.

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Once again, I throw out the caveat that, like the previous post, my comments are based on my personal observations, conversations with friends and family, community discussions, and local newspaper articles.

And I add the warning that this is based on my experiences, mostly in the Wysox and Towanda area. I can't really speak for the effects (except in very general terms) in other towns and communities. Some things are county-wide, some seem limited to (or worse in) my area, possibly because it is roughly at the center of the county and is the county seat.

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Stirling Newberry's picture
Submitted by Stirling Newberry on

are seen in almost every extraction boom. The equilibrium occurs after long enough, when there is enough concentration of wealth to create a higher tier of economy. For many, even most, mineral extraction areas, that does not happen.