Wednesday, September 17, 2014

Fracking Ban Will Benefit Denton's Economy

 
Here is this blog in meme form:
 

In June, the industry released a report (by the Perryman Group) about the costs of the fracking ban in Denton. I guess they figured that no one would actually read the report.
But I did. And I found out that the industry’s own numbers prove that the fracking ban will be a net positive for Denton’s economy.
Now, at first I just pointed out the fact that the report confirms fracking is a miniscule part of our economy, comprising a puny 0.2% of Denton’s gross product and 0.5% of tax revenues. And that's taking their own numbers at face value even though they are doubtlessly exaggerated in their black-boxed methodology.
But now we can add to that assessment by putting their report in the context of Denton’s overall land use and economy as detailed in the new Denton Plan 2030.
You see, the industry report only looked at the costs of the fracking ban. Of course, all decisions have costs. You’ve got to look at the benefits too and see if they outweigh the costs.
Kevin Roden has already made a strong qualitative case that the fracking ban will bring a boom for our economy.  
But now I can add a quantitative case. The ban will bring significant, measurable benefits for our economy.
All I had to do was look at the industry’s own numbers and ask how much gross product and tax revenue fracking generates on a per acre basis. Then I looked at the Denton Plan 2030 to see how that compares to other forms of development.
It turns out that fracking is an embarrassingly UNPRODUCTIVE use of land. Every time we allocate an acre of land to fracking rather than other land uses, we forego significant economic benefits.
Fracking generates about $55,000 in gross product per acre. Not bad. That is, until you compare it to the $114,000 generated by the average acre of land in Denton (over 10% of which is undeveloped).
Fracking generates about $1,100 in tax revenues per acre. By comparison, residential development generates about $4,300 in tax revenues per acre, and that’s assuming today’s median-priced homes. (The figure for commercial is $9,600 per acre.) Plus, homes appreciate in value over time, meaning more and more tax revenue, whereas frack sites depreciate over time (eventually leaving a devalued, blighted brown zone). Oh, and fracking fouls our air, contaminates our water, and devalues neighborhing properties.
It turns out that fracking is one of Denton's least productive land uses. I can’t thank the Perryman Group enough for showing us how much stronger our economy will be once we ban this economic under-performer!

Tuesday, September 16, 2014

Chamber of Commerce or Industry Echo Chamber?

Tonight, City Council is going to consider giving the Denton Chamber of Commerce $227,467. This will provide continuing funds for the Chamber’s Office of Economic Development. Most of this money will go to pay salaries and benefits.
Now, I don’t doubt that there is much good to be had from this Office. But as a quasi-public entity, it creates some ethical grey areas. I won’t be at the Council meeting tonight (I’ll say why in a moment), but I think it would be good if Council aired some questions about this partnership – not in an accusatorial way, but rather in the spirit of public education.
A little while ago, the Chamber’s Board (with no notice given to their full membership) announced their opposition to the proposed ordinance banning hydraulic fracturing in the city limits.
Here’s my question: Is it right for an organization supported in significant measure by taxpayer dollars to advocate for or against ballot initiatives?
We have state laws that prohibit public employees from spending public funds to support or oppose ballot initiatives. City Council members can’t even use their public e-mail accounts to weigh in on ballot initiatives. But here is the Chamber with over a quarter million public dollars weighing in with a political position.
Now, the people paid for by the contract with the city are considered employees of the Chamber, which is listed as a private non-profit corporation. Nonetheless, they are paid for by the taxpayers. Grey area.

Or maybe not so grey...aren't non-profits supposed to stay out of politics? Shouldn't they form a PAC?
The Chamber may not be using city funds to directly take their political position against the ban (though maybe the Council can ask for some assurances of that fact). But they certainly are using their significant clout and cache in our community to leverage their position. And they would not have as much clout and cache if they didn’t receive large financial contributions from the city. Grey area.
And it doesn’t clear matters up to say that other entities might do similar things. As I tell my kids, just cuz she did it doesn’t make it right for you to do it.
Finally, the reason I won’t be at the Council meeting tonight, is because I will be at CafĂ© Loco (6 p.m. free and open to the public!) setting the record straight about how the fracking ban will benefit our economy in significant and measurable ways.
I am not sure if the Chamber should be picking sides on ballot initiatives. But I do know in this case they picked the wrong side. If they would have done their own independent critical thinking about the issue, they’d find what I have found: a ban on fracking will be a major net gain for Denton’s prosperity and welfare. It also respects everyone’s property rights. It protects Denton residents from toxic trespass and home devaluation, while allowing for development of mineral property using less offensive techniques.
Sadly, the Chamber has put its (publically-funded) weight on the wrong side of this issue. A full page and extremely dishonest ad yesterday quoted the Chamber, which in turn was quoting an industry report. Now our Chamber of Commerce has become part of an industry-spun echo chamber.  
That’s something the Council should consider tonight.

How about this? If the Chamber is going to take political positions, why not host a public forum first where all sides of the issue can be aired? Why do it behind closed doors with only the Board?

Thursday, September 11, 2014

The Costs of Fracking

The industry keeps trying to pretend that fracking is a big economic benefit to Denton. I used their own numbers to show how that just isn't so. In fact, the benefits are so puny that they are easily outweighed by all the costs associated with fracking. I spoke to some of those costs in an earlier post.


We can now get a peek at some more costs as outlined by the City of Denton in the draft of its new comprehensive plan. Not all of the costs identified in the comprehensive plan relate directly to hydraulic fracturing, but then again the industry's report about benefits rolled in so many economic multipliers that it strayed way far afield from direct economic impacts of hydraulic fracturing.


What we see in the comprehensive plan is just how much frack sites are going to be a drag on our future - they are going to increase the costs of Denton's development significantly. And they are going to significantly reduce the revenues that could otherwise be provided from more productive and sustainable land uses.


If you want tot do a real cost-benefit assessment (and not a cartoon, biased industry sham with a foregone conclusion), then here are just a few of the things you'd need to think about (from the comprehensive plan draft, pp. 46-48):


"• Future development costs for structures, new roadways, and utility extensions near gas wells, oil wells, and pipelines may incur unforeseen expenses due to the potential need to develop around Drilling and Production Sites or pipelines, relocate or bore utilities around existing pipelines, perform environmental testing if the property is identified as a prior Drilling and Production Site, or clean up and mitigate contaminated, inactive sites.



• There are a significant number of gas wells in Denton and its ETJ, mainly west of I-35. Structures cannot be built over a plugged well and building siting must follow Fire Code requirements to locate in the vicinity of an active well

 

 

• Since vertical construction cannot occur in a pipeline easement, future development potential is severely limited near pipelines...

 

 

• The operations performed at Drilling and Production Sites require heavy vehicle traffic to support the various activities. The increase in vehicle traffic can adversely impact associated roadways and traffic patterns around the Drilling and Production Sites. Dirt, dust, and debris associated with drilling and production activities can produce localized adverse effects which could make new development near them undesirable and unlikely.

 

While…setbacks serve to reduce risks to public safety, they also impact development and compromise land use efficiency. [This is exacerbated by] the wide scattering of isolated well sites throughout much of the western portion of Denton…



While regulations were enacted in 2010 to limit gas well development plats to a maximum of five (5) acres, a number of pre-existing platted production sites exceed one hundred (100) acres and even include residential and other protected uses within drilling and production site boundaries. Thus, development of adjacent properties for residential and other protected uses is restricted by the application of setbacks to these non-drilling sites, regardless of proximity to well locations."

 

 

Thursday, September 4, 2014

Denton Chamber Should Support the Ban


The Denton Chamber of Commerce's decision to oppose the proposed ban on hydraulic fracturing contradicts its vision of promoting “the general welfare and prosperity” of Denton. I respect the Chamber and admire all the good they do for Denton. But they have made a mistake here and I urge them to reconsider their position.

Had they taken an objective look at fracking, they would find that it is a drag on our economy and an obstacle to future development. Fracking poses severe safety and health risks to the Denton community in order to extract mineral wealth that is primarily exported to non-local businesses and absentee mineral owners. Only 2% of the appraised mineral value is owned by Denton residents. Gas wells rapidly deplete in value – 90% in five years. Denton will be stuck for the long haul stewarding hundreds of blighted industrial sites of diminished value.

Shockingly, the Chamber based its decision solely on an industry-funded report by a group with a known record of extreme hyperbole when it comes to estimating the economic impacts of the oil and gas industry. Yet even if we accept the industry’s numbers, they actually confirm the economic case against fracking. They show that it is a miniscule part of our economy: it accounts for 0.2% of our gross revenue, 0.25% of our labor force, and 0.5% of our tax revenues. Fracking accounts for 0.17% of DISD’s budget, while dozens of gas wells right next to our schools emit thousands of pounds of toxic chemicals.

How is any of this good for our welfare and prosperity?

City Council member Kevin Roden rightly notes that a ban on fracking will have “no perceivable impact on our local economy.” Indeed, the ban will bring about an economic boom. It will add value to properties that would otherwise be devalued by nearby fracking operations. It will bring the economic benefits of cleaner air and water and safer neighborhoods. Most importantly, the ban will make Denton more attractive to the skilled workforce we need to support higher-paying jobs and drive our economy forward. A city that allows a poisonous industry less than 200 feet from homes is not an attractive place to move. Without the ban, the workforce we need will find jobs, and spend their money, elsewhere.

It’s disappointing that the Chamber failed to consider the full picture. Like the industry they only thought about the costs of a ban and didn’t see how that flea is dwarfed by the elephant of economic benefits that a ban will bring.

The Chamber advocates “reasonable regulations,” but this too is just a restatement of an industry talking-point. The fact is that the City of Denton worked for three years attempting to craft regulations that would both permit fracking and protect the health, safety, and welfare of her citizens. Yet at every turn, the industry failed to compromise. They insist on fracking as many wells as they want closer than 200 feet from homes and schools on the 30% of our city’s land area already permitted for fracking. We actually have a reasonable ordinance on the books. The problem is that it doesn’t apply to anything, because fracking is vested under older laws. We were just closing the barn doors after the cows got out. Further calls for working on regulations can only shut the door tighter but not corral the herd.
 
Finally, the Chamber incorrectly claims that state law “guarantees” that property owners can access their minerals. Like most rights, mineral ownership is qualified, not absolute. Besides, the proposed ban is actually less restrictive than other valid ordinances in Texas, because it is only a ban on hydraulic fracturing, not drilling. An independent law firm has concluded that the proposed ban is legal.

The ban is the only reasonable option available to us. Without it, we will see the wholesale industrialization of Denton’s neighborhoods by an activity that pumps all the benefits out of town and dumps all the costs on us. On November 4th, we need to pass the ban on fracking in the name of promoting Denton’s welfare and prosperity.  

Sunday, August 17, 2014

They are still trying to fool us

At the City Council public hearing on July 15th, the industry representatives chose the following rhetorical strategy: “We recognize that fracking is a problem in Denton. But we don’t need to ban it. We promise to work with you to draft better regulations.” They are now saying the same thing in their national op-eds about the Denton fracking ban.
City Council members reminded them that we have worked for years on local policy to no avail – there is still fracking less than 200 feet from homes. Then City Council asked the industry representatives what ideas they had for improving our bad situation. They were silent. They just promised to help us come up with…something.
Now it is over a month later, and I’ve just heard from several city leaders that no one from the industry has lifted a finger to follow through on their promise. I know…it came as a shock to me too. You mean they were only blowing smoke?! They don’t care about us?! But they said…wow.
Actually, they are not just passively neglecting their promise; they are actively undermining it. The city has a moratorium in effect on new drilling permits while they revise the gas well ordinance. But that puts a crimp in the plans of Vantage Energy to get frackin’ now. So, rather than work with us (as they promised to do), they are going to work around us: on August 25th, Vantage is going to the Zoning Board of Adjustment to get an exemption from the moratorium.
So, they say they recognize the problem; they respect us and want to help us to revise our regulations. But when the rubber hits the road (and actual money is at stake), they have no patience for our processes and no respect for our rules.
That’s the story of fracking in Denton. It’s an old story. I don’t know who they think they are fooling anymore.

Saturday, July 19, 2014

Fracked on their own Petard: Depantsing the Perryman Report about Denton’s Fracking Ban


On November 4th, Denton could ban fracking, forever ridding its neighborhoods of a poisonous specter. Ever since we got the signatures to put the ban on the ballot, support has been growing like a tidal wave.

This has the oil and gas industry scared. They are getting desperate.  

They’ve taken out full page color ads in the local paper accusing us of being unpatriotic. The head of the Texas Railroad Commission, a man whose campaigns are 80% funded by the very industry he supposedly oversees, insinuated that Russia is behind the ban (I’m still waiting for my check from the Kremlin, but when it arrives, the first round of vodka is on me).

The industry even spent an estimated $50,000 on a counter-petition campaign in support of fracking. For two weeks, out-of-state petitioners, being paid $4/signature (plus hotel and travel expenses), flooded the city. It was a shamelessly dishonest stunt. I was stopped by one petitioner (from St. Louis) in the Kroger parking lot who actually told me that his petition was for a fracking ban. Texas Sharon Wilson caught another petitioner lying on video and several others attested to their annoying and mendacious tactics.

The industry also did what they do best: fund a report about how great they are. They hired the Perryman Group to write a report about how much the proposed fracking ban would cost Denton. Of course, what they ‘found’ were some big scary numbers. A ban would cripple the city!

They timed the release of the report to coincide with last week’s epic City Council meeting about the ban that brought in 600 people (sitting in three overflow rooms) and stretched on until 3 a.m. To parrot the findings of the report at that meeting, several industry representatives drove in to Denton, including the former Chief Justice of the Texas Supreme Court (surprisingly, he now works for the oil and gas industry).

Their strategy worked. Media coverage cited the report’s figures, making it sound like the people of Denton would be committing economic suicide if they adopted the fracking ban. And the industry trolls keep shouting the report’s conclusions into their echo chambers.
Now, usually, I find it best to ignore this kind of overt bias. But the stakes are too high. Someone has to call bulls**t. So, here goes:
1. The report is completely one-sided. It is not a cost-benefit analysis of the fracking ban. It is only a cost analysis. The benefits of taking the oh-so-radical move to ban a toxic industry from neighborhoods are not even considered. Yet City Councilmember Kevin Roden is right that a fracking ban will create a local economic boom. More on this later.
2. It is a black box that does not include the data or the model used. Their model relies heavily on economic multipliers, which are easy to abuse to get the findings you want.

3. The Perryman Group is notorious for exaggerating figures to fit their clients’ preferred reality. When TransCanada hired them, the Perryman Group said that the Keystone XL Pipeline would create as many as 550,000 jobs. Even analysts who support the pipeline called their figures “dead wrong” and ‘meaningless.’ An independent analysis by Cornell University found that the pipeline would create only 500 to 1,400 jobs (gosh, Perryman was only off by three orders of magnitude).




4. Don’t forget the rule of the one percent (or less). We know that fracking is a miniscule part of Denton’s economy. Mineral values are just 1.1% of total property values in the city. Minerals contribute just 1% of total property tax revenues, meaning fracking accounts for 0.5% of the city’s General Fund. The mining sector accounts for just 0.27% of the local workforce. The only exception to this rule is that Denton families actually rake in a whole 2% of the total mineral wealth generated in Denton (companies and absentee mineral owners claim roughly 90%). 

5. OK, set aside the report’s one-sidedness and hidden assumptions. Set aside the Perryman Group’s track record of hyperbolic industry cheerleading. Let’s take the giant leap to assume the report is not a gross exaggeration. Even then, the report actually confirms the rule of the one percent (or less). To start, it concludes that the ban will cost the city about $501,000 in tax revenues annually. The total annual resources of the City are $826 million, so that's 0.06%.  If we compare their figure just to the City's General Fund (representing the bulk of tax revenues) it's still just 0.5%. 

But this is letting them off the hook, because the Perryman Report's numbers ar projections over the next ten years. Everything about Denton's economy is projected to grow over the next ten years, which means annual tax revenues will grow. Indeed, in just the two years from 2011-2013, Denton's General Fund increased by 12% from $87 million to $99 million.

So let's conservatively estimate a 5% annual growth rate in the General Fund, which in ten years would mean it will be at $155 million. Now let's take the halfway point at five years as a conservative average total General Fund level over the projected time frame. That's about $121 million, so we'd need to adjust their estimated cost in terms of tax revenues down to 0.4%.

6. The report confirms the rule of the one percent (or less) again. It claims that the ban will cost 2,077 person years of employment over ten years. Yet ‘person-years’ is a flow that accumulates over the ten year period, so the figure actually amounts to 207 jobs. The total workforce for Denton is 67,316, so the impact of the ban is 0.3%. Surprise! That’s about the same number posted by the city, which we have been using, of 0.27%.

But again this is letting them off the hook, because they are projecting over ten years and Denton's work force is projected to grow significantly in that time frame. Indeed, Denton County's employment grew by over 5% in just one fear from 2012-2013. If we project that into the future and do the same conservative estimates as above (for tax revenues but this time for the work force), then we'd need to revise their figure down to just 0.25%.

7. And again… The report estimates a loss of roughly $25 million per year in the city’s gross product. Now, as far as I know, no one bothers to count the total gross product for cities – only nations and states. So, we will have to use a proxy to estimate Denton’s gross product. One way to do this is to divide Texas’ $1.5 trillion gross product by 215 (as Denton’s population is 1/215th of the state’s population). That yields a gross product for Denton of $6.98 billion, which means Perryman’s estimated cost of the ban is a whopping 0.36% of Denton’s gross product.

Again, though, Denton's gross product will grow over the next decade. If we peg this to population growth, we can get a decent estimate in how Denton's economy will balloon. The expected population of Denton in 2020 is 147,825, an incredible 24% increase from the present population. The same growth in our gross product would mean we revise Perryman's figure down to 0.2%.

In case the pattern isn't obvious yet, we can say the exact same things about their own figures for impacts of a ban on the Denton Independent School District. Even using today's annual operating revenues for DISD, their figure is just 0.2%. But DISD's budget is growing at a rate of 6%. If we project that and do the same conservative calculations as above with taxes and employment, then their figure drops to 0.17%.

8. To conclude, let’s return to the benefits of a fracking ban (the costs of not banning fracking). Many of these benefits are hard to measure, but very real. Indeed, they may not be easy to count but in the end they are what really counts: health, quality of life, and your right to feel safe in your home and peacefully enjoy your property:
A ban will reduce health care costs (and lost worker productivity) by cutting fracking’s outsized contribution to smog-forming ozone in an area with alarmingly high rates of childhood asthma.
A ban will eliminate the waste of hundreds of millions of gallons of city water, in a drought-prone area, and the risks posed to our groundwater resources.
A ban will reduce the costs of development. A fracking ban means dozens or hundreds fewer gas well pad sites, thus fewer impediments to development and lower taxes to finance it.
A ban will open up more land for more profitable land uses. Gas well sites (often more than an acre in size) chew into residential and commercial development, which produce larger and more sustained revenues.
 A ban will protect home values. Fracking reduces nearby residential property values, thus depleting tax revenues.
A ban will protect quality of life. Fracking brings with it: overwhelming truck traffic (it takes more than 1,000 diesel trucks to bring a single well into production), noise and light pollution, and fumes and odors. It takes away your right and ability to enjoy your home.
A ban will attract the workforce of the future. Fracking is a deterrent for the people Denton needs to recruit to fill the high-tech, high-paying jobs that can propel its economy forward. The millenials who are hitting the workforce now want cities with a high quality of life. Poisonous fracking 200 feet from homes doesn’t quite fit that bill. They’ll find jobs, and take their dollars, elsewhere.  
A ban will provide peace of mind. Parents won’t have to worry – like Denton resident Maile Bush worries – about the health of their children. How much of a benefit is it to not have a carcinogen-emitting industrial site outside your child’s or your grandchild’s bedroom window?
The industry wants to frame the vote on the ban in terms of a cost-benefit calculation. But they just shot themselves in the foot with this report. When we really look at the numbers (which they doubtlessly exaggerated in their black box) in the context of the local economy, we find that they are miniscule. They are far outweighed by the benefits of safeguarding property rights, water, air, home values, and the health, livability, and safety of our community.  


Thursday, June 26, 2014

Yes, We Can Say No

The industry-sponsored North Texans for Natural Gasthinks that because we use natural gas we should not be concerned about the negative impacts of fracking in Denton.
Here’s their logic: if you use plastics and electricity or grill steaks, then you must accept the cancer-causing air emissions, waste of clean water, and noise of fracking in your neighborhood.
Frack Free Denton is not a movement against natural gas. Rather, it is against the permitting of toxic industrial activities near homes, schools, and parks. It is a movement for safe and healthy communities and people’s rights to peacefully enjoy their property.
With the ban on fracking, the citizens of Denton are taking a stand for safe and healthy neighborhoods. And the frackers’ response is to tell us that we have to accept their poisonous activities because natural gas is used to make lacrosse sticks!?
That’s how out of touch they are. They just want us to be meek and compliant consumers, not active citizens protecting our children, our property, and the future of our town.
According to their absurd logic, as long as we use natural gas we cannot reject any part of its development (even one process in one town) no matter how dangerous it is. If that was the way we did things, we’d still be insulating our schools with asbestos.
Frack Free Denton is all about local self-determination: the people bearing the negative impacts of hydraulic fracturing should be the ones to decide. We get to choose what Denton will be. And we’ve chosen to cultivate the nation’s largest community garden and to get a nation-leading 40% of our energy portfolio from renewable, wind-generated electricity.
Denton has long been shaped by thoughtful citizens. Thanks to their leadership, we are already walking down a path toward independence from the industry’s unsustainable and harmful products.