With all of the attention that the fracking industry has been receiving over the past few years, is anyone paying attention to the some of the trends that are emerging? We all know that history often repeats itself and with the fracking industry, it could be very well doing so again.
History’s Lesson of Natural Gas
Let’s take a trip back into the past and take a look at the mining companies that once existed in Wellsboro, a small quiet town in northern Pennsylvania. The mining industry had just taken off, and wells were being drilled everywhere to access the natural gas that laid beneath the Earth’s surface. With hundreds of wells drilled in a relatively short amount of time, the local economy boomed and prospered in a way that had never been seen before, making it very reminiscent of the gold rush.
If you were to visit that town today, you’d hardly know that there was once a booming hydraulic fracturing industry. Natural gas prices hit $13.42 per million BTU in 2005 and stayed that high for the next three years, before dropping so fast until they held steady at just under $2 per million BTU before they rose again. When you look at those natural gas prices and the cost of fracking technology, it is easy to see why the oil and gas community in Wellsboro dried up and vanished. Fracking was not profitable enough at that time to continue investing in it. Businesses and residents in the local community that were relying on the long-term growth had nothing left to turn to.
Booms Only Last So Long
Boom and bust cycles are never-ending, they can go forever. And although it can be hard to keep that in mind when you’re looking at the amount of profits that are to be made in the fracking industry, profits alone won’t be enough to save you if there isn’t any consideration given to sustainability.
The fracking industry is huge and no matter where it is at, its impact is going to be far reaching and heavily felt. While some states like New York have decided not to jump on the bandwagon for fear of environmental and health concerns, there are far simply too many benefits to gain. States and local communities that decide to take advantage of those benefits need to do so cautiously.
Benefits of Natural Gas
With the discovery and development of the Marcellus and other shale formations in the United States, energy production has completely revitalized the economy. Tax and income revenues and employment rates have increased while significantly reducing America’s dependence on expensive foreign oil.
The Challenge of Natural Gas
Since gas prices are so low, the price of oil and other energy commodities are less expensive. Some are starting to question the future of local fracking communities. Many communities are scared of overinvesting into these companies because they will not be able to invest as heavily in other industries for more sustainable and long-term growth. Others are afraid to invest because they are afraid that they will become the next Wellsboro mining community.
As more and more fracking communities continue to invest in their development and infrastructure, perhaps they will be able to find a way to keep local communities from falling apart and disappearing like so many have in the past. If they can overcome the challenges that the boom and bust curse presents, perhaps they can continue to grow and benefit both in the short-term and long-term, in spite of oil prices.