Apr
14
Class 21 – Income Inequality and Fracking – Mohd Sakib
April 14, 2015 | Leave a Comment
Hydraulic fracturing or “fracking” has recently provided an economic stimulus to many states and local provinces due to the oil and gas-rich rock formations in certain areas. The Mother Jones article “Income Inequality and the Fracking Boom” presents an interesting argument that fracking may actually help alieve income inequality in these regions due to the fact that these activities have brought wealth, jobs, and possibly, income mobility. This argument has been proposed because of the massive expansion of fracking in certain geographical locations that have the formations needed for gas and oil extraction. To address this thesis, I definitely agree that social mobility depends heavily on your geographical location, but there are various underlying drivers that can lead to this mobility, not just one activity such as fracking. Factors such as school systems, social issues, affordability of education, employment levels among others all play a strong role in whether or not there can actually be movement up the income ladder. Fracking may actually be a strong catalyst in income mobility but the author doesn’t necessarily connect the dots as to how it actually is one, and so, I don’t really see the direct correlation in solving income inequality through fracking.
Additionally, my assumption is that this oil boom is benefiting the state and energy companies more, rather than distributing wealth to low-middle income families in these areas. In fact, as we have seen in the Gasland documentary, many families are being severely harmed by the oil and gas drilling, having to either move out or deal with detrimental health problems. Underground water is polluted with carcinogenic chemicals from fracking, which eventually end up in the blood, tissues, and blood of the innocent families that live near the wells. Many of them have absolutely no say when the oil and gas companies forcefully set up shop and dig wells around their homes. These energy companies are not sharing revenue with these landowners either, further hampering any economic incentive that the public in these areas may obtain from fracking.
After going through all of these issues, how then, is fracking reducing income inequality and helping the poor or middle class individuals climb out of their income level? If anything, fracking is pushing these individuals down the economic ladder even more, and forcing them to face a multitude of financial and health problems. Indeed the energy companies may give some sort of remuneration to these families for moving into their lands, but do are these compensations actually commensurate with the costs they are facing? The counter argument against this is that the energy companies may employ people from these towns, providing more income to the towns as a whole. There should definitely be more studies on these economic impacts along with the health effects as well.
After watching Gasland and reading these fracking articles, I was surprised to read Mark Perry’s article from the American Enterprise Institute. I was particularly surprised when he states “We should all welcome the increased income/wealth inequality that will result from future revolutionary, breakthrough technologies like hydraulic fracturing and horizontal drilling.” He argues that fracking has created “an inevitable and highly desirable income divide” because it has generated huge financial rewards for some while creating income inequality for many others. He further tries to justify this greater divide by arguing that innovation, entrepreneurship and greater technologies are all positive outcomes of fracking. Moreover, his statement that “An increase in income or wealth inequality is a small price to pay for The Great American Energy Boom that did bestow massive wealth on a small group of petropreneurs, but also delivered a little bit of greater wealth to all of us” is almost laughable. These points further strengthen my point that fracking doesn’t improve income inequality, but rather increases it.
The metro politics article “New York’s Two Sandys” provides a great example of how natural catastrophes can accelerate inequalities affecting low-middle income individuals. Hurricane Sandy hit New York on October 29, 2012 and flooded our streets, homes, businesses and more. There were of course immediate consequences from Hurricane Sandy, such as damages to physical infrastructures and the local economy. Beyond that however, there were also damages to low-income residents, many of whom were directly affected in regards to their housing. “The storm destroyed or damaged 305,000 housing units in New York City. Poor and working class New Yorkers, especially tenants, immigrants, and people of color, have struggled disproportionately to repair their homes, echoing trends documented in the aftermath of Hurricane Katrina in New Orleans.” Sadly, these lower-income homeowners didn’t get much government funding, even though there was $3 billion in federal aid to the city. This natural disaster shows another way how the environment can affect income inequality.
