Home About Archives RSS Feed

The Independent Investor: Not In My Back Yard

By Bill Schmick
iBerkshires Columnist
Part II in a look at the boom in natural gas; Part I can be found here.

The oil and gas boom in this country has had some serious side effects. Everything from earthquakes to polluted water has been blamed on the industry. Residents near the areas of hydraulic drilling and exploration are fighting back using the Environmental Protection Agency, lawsuits, lobbying and the media. The challenge is separating fact from fiction in this on-going fight.

There is no question that there has been a remarkable increase in the number of earthquakes in the middle of the country, for example, or that an entire neighborhood of homes in Dimock, Pa., claimed it was threatened with explosive levels of methane gas. Twenty water wells in the same area, the site of natural gas drilling in the Marcellus Shale, showed the presence of sodium, methane, chromium or bacteria.

A recent documentary, "Gasland," on HBO featured another Pennsylvania village caught in the controversy over America's oil and natural gas boom. The movie allegedly uncovered the "secrets, lies and contamination" of natural gas drilling. As a result of the growing controversy three states — New Jersey, New York and Pennsylvania — have called a moratorium on any further drilling or hydraulic fracturing for the time being. That is a big deal because the Marcellus Shale sits below those states and has enough natural gas to fuel this country for the next 20 years.

Environmentalists and people living near drilling sites are saying not in my back yard. They believe that attitude is justified since the risks are great and who can blame them? I'm sure I would feel the same way if someone proposed to drill a well in the parking lot of my condo. The moratorium is needed, so its advocates argue, simply to study the impact of this drilling before people get hurt or sick. Naturally, the energy industry is arguing that the risks are small and that thousands upon thousands of wells have been drilled with no negative impact whatsoever. They have a point.

Take the earthquake issue, where a study by the U.S. Geological Survey identified a sixfold increase in manmade quakes in an area including Arkansas, Colorado, Oklahoma, New Mexico and Texas. All the headlines pointed to natural gas drilling as the culprit. The gas guys were found guilty, strung up and buried before the survey team could come to a conclusion. Only then did the scientists admit that the quakes were not directly caused by hydraulic fracturing with one exception, one lone well in Arkansas.

The 20 "contaminated" wells in Pennsylvania I mentioned were later found by the EPA to present no threat to human health and the environment. As for the earth beneath the affected homes in Dimock, it did contain methane among other elements, but the EPA could not prove a connection between the contaminants and the oil and gas developments. In fact, they concluded that the presence of these elements could just as easily have been caused by naturally-occurring background levels or other unrelated activities.

I have learned that most studies tend to reflect the bias of those conducting them. In other words, you can make a study say anything you want given enough samples. This battle, in my opinion, has already been won by the weight of public opinion. A cessation of exploration will have a negative impact on the economies of all three states. At the same time, the declining price of gas will not justify continued drilling in a land of litigation.

Free market capitalists might moan and argue that a person has the right to do whatever he wants with his property including fracking. On the other side, advocates will contend (rightfully so) that there is no such thing as zero-impact drilling. One's decision to allow fracking in your backyard can and does directly impact my property next door.

The industry heightens the paranoia surrounding it by refusing  to disclose what potentially toxic chemicals (if any) are used in the drilling process. The regulations do not require disclosure so they won't provide it. They are also exempt from EPA regulation thanks to the Bush Administration's 2005 loophole legislation dubbed the "Halliburton Loophole" by opponents.

As a result, all sorts of fears can be invoked (real or imagined) by any blogger or tree-hugging anarchist that wants to invent their own bizarre plot against humanity. Is the nation's watershed in jeopardy of contamination? Many environmentalists claim it could be impacting millions of unsuspecting Americans. Without the data, we don't know. Others worry that in the vacuum caused by the absence of federal regulation, undermanned and revenue starved state regulators are turning a blind eye to industry regulation.

Back in the day, when the United States was still a powerhouse of industry, a growing and vocal group of concerned citizens began uncovering the seamier side of this formidable industrial base. We discovered that the byproducts of these industries were causing enormous amounts of air and groundwater pollution. At the same time, workers were coming down with all sorts of ailments from asbestos poisoning to cancer. Instead of helping the industrial sector transform itself into something more acceptable, we drove it away.

Politicians swooped in to pass bill after bill creating new safety standards, stricter codes and of course higher taxes on these bad boy industries. Industrial companies found themselves spending more time and money defending their practices from lawsuits, sit-ins and protests. In the end it wasn't worth it. They started looking for less hostile manufacturing locations abroad and found them.

Americans today lament the loss of that U.S. industrial base. We conveniently forget that part of the reason for that exodus was caused by a sea change in how we viewed those industries. Although the present challenges facing further gas drilling in our country should be taken seriously, let's try not to apply the same "not in my back yard" attitude toward gas drilling that sent our industrial base packing in the past.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.




0 Comments
     
News Headlines
Central Berkshire Habitat Honors Volunteerism at Annual Meeting
Cheshire Had Looked at Joining Northern Berkshire School Union
Pittsfield Medical Associates Awarded Medical Leadership Role at Berkshire Place
Berkshire County Arc Hires Director of Brain Injury Services
Destination Williamstown Names New Director
Cultural Pittsfield This Week: Oct. 20-26
Adams Investigating Operations at Former Curtis Paper
Williamstown Finance Endorses Police Station, School Regionalization
Pittsfield Establishes Community Preservation Act Budget
Work Group Discusses Stigma Associated With Heroin Use

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (238)
Independent Investor (325)
Archives:
October 2017 (3)
September 2017 (5)
July 2017 (2)
June 2017 (8)
May 2017 (7)
April 2017 (7)
March 2017 (8)
February 2017 (8)
January 2017 (6)
December 2016 (2)
Tags:
Congress Debt Ceiling Bailout Greece Europe Crisis Stimulus Selloff Debt Retirement Stock Market Economy Federal Reserve Election Banks Taxes Pullback Stocks Housing Japan Recession Commodities Euro Wall Street Deficit Interest Rates Energy Oil Fiscal Cliff Jobs Rally Metals Markets Europe Currency
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: Markets Are Going Higher
The Independent Investor: Does Cash Mean Currencies?
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Taketh Care of Your Workers and They Will Taketh Care of You
@the Market: Markets Need a Time Out
The Independent Investor: Tackling Taxes
The Independent Investor: Time to Check Your Insurance Policies
@theMarket: NK Missile Dud on Wall Street
The Independent Investor: The Price Tag of Disaster
@theMarket: Markets Brace for the Weekend
The Independent Investor: America, the Battered
@themarket: Global Interest Rates Rise, Global Stocks Fall
The Independent Investor: The Market's Half-Time Report