The Illusion of Economic Benefits from Fracking

The release of the East Coast Oil and Gas Study today by the Ministry of Business Innovation & Employment does nothing to allay the concerns of opponents to the industry.

“One would have thought the reports authors would have provided a more substantial explanation as to how the local authorities are going to deal with the six  East Coast specific questions posed by the PCE’s report” said Paul Bailey, Green Party spokesperson.

Typically of economic benefit reports, the study covers in a lot of detail the money that can be made from oil and gas exploration but is short in detail on the social costs and environmental risks of having the oil and gas industry operate in the Hawkes Bay.

“The following points are a collation of issues that have arisen offshore again and again” said Mr Bailey.  “It is a pity that the terms of reference for the report did not cover these concerns. I do not believe that this would have been unreasonable, and would have gone a long way to allay the fears of a large section of our community who have no confidence in an industry that has, as recently stated by the PCE, a long way to go before gaining their social licence to operate”.

False economic promises

  • Much of the spending, and therefore much of the ‘economic multiplier’ effect will take place outside Hawkes Bay, either offshore or in Taranaki.
  • Many of the better paying jobs will go to transient workers who have industry experience, rather than to Hawkes Bay residents.
  • It takes about a year to prepare, drill and frack a well, and about 98% of employment happens during this pre-production stage.
  • Drilling and fracking jobs, and any associated spending result in destructive short term boom and bust cycles that are often harmful to local communities.
  • The estimated amounts of oil and gas which will be produced out of any new wells are highly uncertain. This means any royalty incomes are highly uncertain and that the inevitable bust comes sooner than predicted.
  • The expected maximum production lifetime of a well is only 35 years. Hardly the basis for a long term industry.

Hidden Costs

  • There are 1000’s of heavy truck trips per frack jobs. The oil companies are not rate payers. How are our local councils going to be reimbursed for the additional wear and tear on the roads when central government is reducing roading subsidies by 50%?
  • What effect will over 3000 towering, well lit, and noisy drill rigs operating 24/7 have on industrializing our landscapes?
  • Where will the water come from and at what cost to our local farmers?
  • What is the cost to our economy if aquifers are contaminated?
  • What are the impacts of drilling and fracking on land values of impacted properties and their neighbors?
  • How much economic effect does it have on a farmer having stock movement and placement being dictated by oil companies?

The Green party feels that until these issues, and the six points specific to the East Coast raised in the PCE’s interim report, are satisfactorily resolved there should be a moratorium on exploration on the East Coast” said Paul.

Press release to HB Today 7 Mar 2013

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