Economics vs. Environment in the Energy Sector in 2012

The old debate has sprung up once again in the energy sector, and who will win, the environment or economics? Is there ever a clear winner? Which side is more important? Can you put a price on public health tied to clean air and water? Can America afford to care about pollution when so many people are without jobs? These and many other questions arise as science progresses, finding both more sources of energy and more sources of pollution. Now the public has to decide which is more important to them: the environment or the economy. Can it be both?

In Oregon, two coal companies vie for land at the Port of St. Helens to aid in shipping coal to China, but environmental activists have inhibited their effort [1]. From the economic standpoint the two ports would necessitate hiring over 100 people and bring in millions of dollars of property tax revenue. In addition, “the company promised to donate 10 cents per metric ton of coal to the school districts of Columbia and Morrow counties—$300,000 to $350,000 to each annually.” With unemployment at about 12% in Columbia County where the projects would be located, how can the area afford to say no? But environmentalists see an entirely different picture full of coal “dust polluting the air, barges spoiling local fishing and tourism, and cross-ocean fallout from burning the fuel in dirty Asian furnaces.” That’s right, burning fuel in Asia affects the air in the Pacific Northwest. The United States Environmental Protection Agency says coal-fired plants in China are one of the leading causes of mercury emissions across the world and even contribute to mercury contamination in seafood. Yikes!

The Wall Street Journal “Coal Fuels a Fight in Oregon””]Officials in Columbia County are worried about both the economic and the environmental impacts. They pass the buck to the EPA saying if the coal companies can meet the government’s stringent regulations, then they should be allowed to bring the jobs.

If the two companies and those in favor of increased jobs are lucky, the port construction will begin sometime in summer of 2013. If the environmentalists have their way, the projects will get blocked as they did last year in Washington.

On the other side of the country, environmental issues have also slowed economic growth as road blocks pop up in the effort to green-light hydraulic fracturing of natural gas in New York [2]. Hydraulic fracturing, or injecting a pressurized fluid into a well to increase the  recovery of fossil fuels, is used in the extraction of natural gas from shale formations across the country. New York has not yet tapped into the vast shale play upon which it resides, the same shale play that Pennsylvania has benefited from so much.

EIA”]The state Department of Environmental Conservation canceled a meeting of the drilling advisory panel earlier this week for the second time after 40,000 comments funneled in on proposed state regulations and an environmental impact statement. Shale is often described as “one of the richest natural gas fields in the world,” and has yet to be used in New York because of awaiting deliberation. The panel is at a stand-still until all information can be interpreted, thereby leaving New York devoid of this new economic opportunity. Will Oregon and New York be able to find the happy medium between economics and the environment or will one dominate?

Meanwhile in Texas, where unemployment for December lowered to 7.8% while the country as a whole was at 8.5% (preliminary numbers from the Bureau of Labor Statistics of the US Department of Labor), hydraulic fracturing has boomed; the most influential of numbers, the state’s mining and logging percentage, is up 18.7% in the past 12 months [4]. Texas seems to be benefiting greatly from the increase in natural gas drilling.

However, according to Dr. Mark A Engle, a geologist with the United States Geological Survey’s Eastern Energy Resources Center, “Texas ranks pretty much dead last of any state I’ve worked with for keeping track of [the quality of water discharged in hydraulic fracturing]” [5]. And starting February 1, drilling operators in Texas will now have to report chemicals used and the amount of water needed in fracking each well (available at http://www.fracfocus.org). The old adage says “ignorance is bliss,” and in this case, it might be the truth behind Texas’s increased economy. What kind of effect will these new reports have on fracking regulations in Texas? The EPA already regulates the disposal of flowback from fracking wells into surface waters and diesel fuel used as the underground injected fluid, but the agency is still studying all of the environmental impacts of fracking [6]. According to the EPA, “in many regions of the U.S., underground injection is the most common method of disposing of fluids or other substances from shale gas extraction operation,” but in Wyoming, local well owners have complained of contaminated drinking water [7]. Case studies are being conducted around the country to test for potential groundwater contamination [8]. Will more stringent water quality standards be imposed to protect groundwater? Will fracking still be as economically viable if there is an increased cost of water treatment imposed upon the drilling companies?

This blogger eagerly awaits economic regulations and deliberations in each of these battles and wonders… Will there be a peaceful end to the war of economics vs. the environment? It seems like the deliberations have resulted in as much progress as regular peace talks. Where does one draw the line on compromise? For Oregon, the EPA may be the deciding force; economic development happens where the EPA’s regulations end. For New York, the public outcry will be the deciding factor in the potential economic progress. But maybe Texas can find a way to keep the money coming without hurting its citizenry. Maybe drilling is not as bad as the environmentalists in the Lone Star State think and those Wyoming complainers are just looking for a new frivolous lawsuit. We can only hope that our concerns are simply that. But in the mean time, we need the increase in energy, we need the boost in the economy, and we need to protect human health. We should probably find a way to do all three.

[1] http://online.wsj.com/article/SB10001424052970204573704577185232624361026.html

[2] http://green.blogs.nytimes.com/2012/01/27/new-yorks-fracking-deliberations-inch-along/?ref=energy-environment

[3] http://www.eia.gov/analysis/studies/usshalegas/

[4] http://www.bls.gov/eag/eag.us.htm

[5] http://www.nytimes.com/2012/01/29/us/new-data-not-so-sunny-on-us-natural-gas-supply.html?scp=1&sq=shale%20in%20texas&st=cse

[6] http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm

[7] http://www.epa.gov/hydraulicfracture/

[8] http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/case_studies.cfm

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