Report: Who Pays for the Cost of Fracking in Ohio?
Monday, July 22, 2013
COLUMBUS, Ohio - A new report is raising concerns on a little-examined aspect of the fracking debate, that is, the costs, and who will be left with the bill when the drillers pull out of town. The Environment Ohio Research and Policy Center examined the state's financial assurance requirements for oil and gas drilling operations and found Ohio's bonding requirements inadequately protect communities from the effects of hydraulic fracturing.
According to policy advocate Julian Boggs, reclaiming a fracking site can cost hundreds of thousands of dollars, and there also are other damages to consider such as ruined roads and contaminated groundwater.
"When the bust comes, when the drillers leave town, who's going to be left holding the bag? Who's going be left with this cost?", Boggs asked. "And the costs can be very high, already in the millions of dollars, and oftentimes there are not enough financial assurances."
According to the report, drilling operators in Ohio are only required to secure $5000 in bonds per well up front, while some other states require $250,000.
The Ohio General Assembly recently rejected a severance tax on the oil and gas industry in the state budget, which, according to Wendy Patton, senior project director at Policy Matters Ohio, would have at least provided a cushion for long-term risk management. She said that, for an industry with high risks and uncertainties, Ohio's insurance requirements for oil and gas drillers are low, compared with neighboring states.
"What are the long-term impacts of this technology?", Patton asked. "We really don't know what the impacts are going to be on our water, on our air and on our public health."
Youngstown City Councilman Mike Ray said he's seen the damage that can be done to a community when companies cut corners in fracking and waste-water disposal. And he questioned whether the environment and economics are really in balance.
"We need to look at who's going to be footing the bill for environmental compliance after the fact," said Ray. "We just need to find out what's right and use some common sense in what's right for Ohio."
The report recommends new rules which would ensure broad accountability for fracking-related costs; eliminate loopholes, exemptions and discounts; require stronger forms of financial insurance; and are integrated into oil and gas regulations.
The report is available at EnvironmentOhio.org.
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