Fracking has been a controversial issue nationally for the past several years. Multiple counties have attempted to ban fracking or to put a temporary moratorium on it. As a commercial real estate agent, I see how the fracking industry is helping the economy during a recession, but I also see how fracking can threaten property values.
Is fracking a safe and viable solution or should we consider turning our focus to renewable energy solutions? The fracking revolution is more than just good geography, i.e “good rock”. Fracking needs investors willing to take a risk. Real estate laws that allow owners of subsurface rights to exploit those rights at the expenses of surface right holders, and an industry characterized by thousands of entrepreneurs rather than a single national oil company.
The fact is that fracking has created 1.7 million jobs since 2012 and that number continues to rise. The jobs are not limited to fracking companies but include all of the different companies that produce the materials and resources needed to support the industry. It is estimated that the price of natural gas will stay relatively low for the next 40 years which will effectively limit the growth of the renewable energy sector. Robert D Blackwill, a Senior fellow for US Foreign Policy at the council on foreign relations wrote "crude oil production grew by 50% in this country between 2008 and 2013.
Last year the United states passed Russia as the world's leading energy producer and by next year, according to projections by the International Energy Agency, it will overtake Saudi Arabia as the top producer of Crude oil". From a geopolitical point of view the power the United Sates will have as the number one energy provider cannot be underestimated. US oil production could drive down the price of oil 20% or more, and this subsequent price drop will certainly affect countries like Russia, Indonesia, Venezuela, Nigeria, Columbia and the middle east to name a few. These countries will lose political clout that comes with being an energy producer and will/could lead to civil unrest within those countries.
While renewable energy continues to be a talking point for politicians, our track record indicates a preference for continuing to utilize non-renewable energy solutions. During the oil embargo in 1973, we had an opportunity to explore renewable energy solutions but instead chose to tap into our national oil reserves. Coal burning factories will choose to switch to natural gas before switching to a factory using renewable energy.
From a real estate perspective, fracking can impact the property values of nearby homes and businesses. Take the case of the family in Daisytown, Pennsylvania who live across the street from a new gas well. They applied for a new mortgage on their home and were denied because of their close proximity to a well. Last year, in a highly publicized case, Congressman Jared Polis saw a fracking tower go up on the property across from his house is Berthoud, CO. Polis filed a complaint with state regulators and eventually a lawsuit over concerns “about the impact that fracking has on the health of communities as well as the economic impact as it relates to property value.”
Fracking can be a very divisive issue; some view it as a road to energy independence, others as a threat to the safety and livability of our communities. Are we being good stewards of our natural resources for future generations yet unborn who cannot speak for themselves? Of these opinions only one thing is for certain -- it isn’t going away anytime soon.