Recent Research and the Spatial Distribution of Gains

Volume 30, Number 3, February 2017

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Shale gas

Michael Bradford provides some support material for his article ‘Fracking in North Dakota’ in this issue

Recent research and the spatial distribution of gains

US research on shale gas and oil developments suggests that the major gains from these US developments, in the form of profits and employment, go to the original area where oil was developed and where the current industry is based. This means Texas and Oklahoma and not the current source areas such as North Dakota (oil) and Pennsylvania (gas). Many of the development teams come from Texas and return there.

Change over time

Oil and, to a lesser extent, gas prices, fell dramatically from June 2014, partly because of slow economic growth worldwide and partly because of rapid development of US oil. North Dakota oil production had not yet reduced but development of new wells has slowed. The development of oil and gas sites in the UK may be delayed by this reduction in prices.

Spiral of change and the growth of large companies

During the boom, another cycle has been observed in the Pennsylvania shale-gas fields which involves the size of the development companies. The large companies can affect prices by pumping more gas. The resultant lower prices mean that many of the smaller companies have to sell their sites to the bigger ones because prices are not high enough. The larger companies then reduce production so that prices rise. The smaller companies come back to develop new sites and so the cycle, or more appropriately the spiral, because the large companies grow, begins again.

The shale-gas rush

The development of shale gas is much disputed in the USA. New York state has banned fracking while neighbouring Pennsylvania is a major shale-gas producer. Some suggest that Pennsylvania’s history of coal mining and lumber production have moderated its opposition to fracking.

It is worth thinking about the changing views of the California Gold Rush in the 1860s. During the late nineteenth century the Gold Rush was seen as ‘an epic of Anglo-Saxon achievement: progress with a capital P; all that was good about the California experience – exuberance, resilience, capacity for development, and political intelligence’. It was also said to be a successful experiment in self-government. A contemporary interpretation, however, suggested it ‘represented a repudiation of law, order, and civilised society’. Recent interpretations have also been negative. It has been described as ‘headlong exploitation of the land and the people, an orgy of greed and destructiveness’. It led to the death of over 100,000 Native Americans and destroyed the mountains and rivers of Northern California for two generations. This social and environmental critique contrasts with a mid-twentieth century interpretation as a ‘technological and industrial achievement’.

There is a similar range of views in the current UK shale gas dispute.

One viewpoint is that fracking is a safe and reliable technology and a secure home-based source of energy in a period when the use of coal has to be reduced. It leads to inward investment and a boost to employment in areas where shale gas can be profitably produced. It can reduce the balance of payments deficit nationally, boost local economies, provide cheaper fuel (disputed in the UK) and, by substituting for coal, reduce the amount of carbon dioxide discharged into the atmosphere.
An alternative view states thatfracking is exploitation of the global environment because, as a fossil fuel, it still contributes carbon dioxide to the atmosphere as well as methane, a more powerful greenhouse gas. The chemicals used in the process can pollute the local environment, in places affecting the health of humans, animals and plants. Increased traffic moving water, waste water and sand may also pollute the environment. The increased employment, it is argued, is overestimated and is often provided by migrant, not local, workers.

The politics of fracking

The political aspects of fracking are illustrated by the UK government’s desire to become the major decision-making body in development decisions, in place of local authorities. The Lancashire decision has not been announced and may be overridden. The national government has already changed its decision about developments in National Parks — it will now allow horizontal drilling at depth from surface drilling outside the parks. There is a clear national–local government conflict emerging over shale.

There has been governmental talk of recompensing communities affected by fracking. More recently compensation of households has also been suggested. It is not clear whether this is additional to the community level payment or a whole or part substitute for it.

Fracking is an excellent case study for exploring the intersection of economic, social, environmental and political processes through local, national and global scales. The boom-bust cycles raise issues of intergenerational social and environmental justice.

Emeritus Professor Michael Bradford, former head of geography, University of Manchester, former president of the Geographical Association.