With regard to socioeconomic impacts, the phases of development and post-development production can have very different effects on the community’s health and quality of life. As mentioned above, the influx of outside workers in the development phase often leads to a number of boomtown effects that can put stress on the community’s infrastructure, housing, services, community character, and the psychology of its residents. The extent to which these pressures negatively affect the community depends upon its size, the magnitude and pace of development, the area’s capacity to absorb a population increase (e.g., nearby towns with available worker housing), and the predisposition of residents to development.
Quality of Life—Economic Impacts
During exploration and the early phase of development, many of the jobs require specialized skills, prompting companies to bring in temporary outside workers to fill those positions. As development expands in the area, more direct and indirect opportunities for local employment may become available, particularly in businesses involved in trucking and construction. Such an increase in development can lead to a rise in incomes and increased economic activity in the area.
In addition to stimulating some businesses, the oil and gas industry can come into competition with other local businesses and local government for workers, which can put upward pressure on wages. If the local labor supply is limited, the industry may draw increasing numbers of outside workers to the area. This population influx can increase local demand for food, fuel, and housing, which drives up prices. For some local businesses—often those already on the margin—rising costs for items such as wages, fuel, and transport could cause them to fail, decreasing the economic diversity of the community (a phenomenon known as crowding out).
Depending on the size of the community and its proximity to other towns with available housing, the arrival of project workers can put a strain on the community’s housing supply. Housing shortages can be acute in small communities without existing construction capacity. Oil and gas workers can often afford to pay higher rental prices than other workers, thereby reducing the availability of affordable housing. This can result in the displacement of some long-term residents, particularly renters and the elderly, who are forced to leave the area to seek lower-cost housing elsewhere.
As mentioned in Stage 3, if there is a gap between additional local government revenues (from taxes, leases, and royalty payments) and the demands on community services and infrastructure, it may be particularly pronounced at this stage of heavy development. A rapid influx of project workers and their families can put a strain on local infrastructure and services. Affected services can include the following:
- transportation infrastructure
- waste management
- power generation
- emergency response system
- traffic control
- communications networks
- recreational facilities
- health care system
A 2014 Duke University report found that the highest costs to county governments due to shale development have been road maintenance and repair, followed by increased staffing costs needed to respond to growing service demands (such as law enforcement and emergency services). 1 For municipal governments, the highest costs have tended to be upgrading sewer and water infrastructure, followed by greater staffing costs. 2 As noted in Stage 3, the study found that while local governments have financially benefitted from the advent of shale development overall, in certain regions (the Bakken Shale in particular) where large-scale development has occurred at a rapid pace, governments have struggled or failed to keep pace with increased costs.
Over time, as the industry matures to the post-development production phase, the number of transient workers declines and workers that are more permanent fill the long-term development and production positions. These permanent employees are either transplants who choose to relocate with their families or locals who have acquired the skills and training needed to compete for jobs. As community residents, they spend a significant part of their income locally, contributing to the area’s long-term economic activity. Companies also continue to buy some goods and services locally, generating indirect and induced employment opportunities and further contributing to economic growth.
Some communities in the western United States, which have long been host to oil and gas development, have seen the benefits of oil and gas development begin to materialize as development enters the production phase. At this point, revenues tend to exceed the costs of natural resource development from a fiscal standpoint. These revenues can be used to fund improvements in community services and infrastructure or to provide tax relief to communities. 3 At the same time, it is important for governments to be wary of becoming too dependent on these revenues, as they typically decline with the end of production and may fluctuate with oil and gas prices. 4
Quality of Life—Social Impacts
The size and character of the community, as well as the views of its residents on shale development, can play significant roles in how a community experiences the changes accompanying development. In economically depressed areas, many residents may welcome the economic activity and opportunities brought by shale development. In rural communities that are focused on agriculture or tourism, however, industrial development can be seen as a threat to livelihoods and community character.
In many towns experiencing an economic boom, the benefits and costs of development are not distributed equally among residents, which can lead to social friction. While some residents may receive royalties from leasing land to developers, their neighbors may not enjoy these rewards. Some may feel they are experiencing the negative impacts of rapid industrialization and population growth (e.g., strained municipal services, widespread construction, and unfamiliar social issues) but are not receiving any benefits. In a recent survey of residents from areas experiencing shale development, those not holding leases or receiving gas royalties describe the area as “worse” or “much worse” as a result of energy development, while those with income from wells describe their area as “much better.” 5
As mentioned in the economic impacts section above, some local businesses may thrive but others may suffer, particularly agricultural, recreational, and tourism-based enterprises. Housing prices may increase, creating higher income for property owners and capital gains for those selling real estate; yet low-income individuals may no longer be able to afford to live within the community. These economic divisions may result in increased tensions; mistrust; overt conflict and even litigation; and generally diminished cohesiveness in the social fabric.
As development moves into the production phase, many communities eventually adapt to the changes, especially if new local jobs are created, the economy expands, and the number of transient workers decreases. 6
Quality of Life—Psychological Impacts
As noted in the social impacts section above, several factors can play into whether community residents feel positively or negatively about the changes in their communities. Certainly, people may welcome some changes while feeling concerned about others. When the arrival of shale development brings significant change, in particular to a small community or one that is unfamiliar with industrial development, the scale and pace of changes in the development phase can be overwhelming to some residents. Community members may find it difficult to manage the cumulative impacts of population influx and industrial development, which can potentially include increases in traffic, a rise in crime, overcrowded schools, and stressed local infrastructure and services.
The psychosocial stress on some individuals as they experience the cumulative impact of the many changes in their communities may contribute to physical illness, 7 addiction, and mental illness. 8 The increased occurrence of other physical symptoms should be considered in the context of possible air and water quality impacts (see the air quality and water quality sections in Stage 3).
Quality of Life—NoisE ImPACTS
In the development phase, the operator often installs multiple wells per pad, prolonging the period when the project is generating noise (see Stage 3 for an overview of the effects of noise). During the longer production phase, the operator may occasionally re-stimulate or perform workovers on the well, which entails noise at the site and additional truck traffic transporting materials to and from the site. Workovers are, however, infrequent throughout the life of a producing well.
Quality of Life—Visual Impacts
The effects on the local viewshed are the most dramatic in the development phase as multiple wells are constructed on the pad. Once the operator has completed drilling and hydraulic fracturing and the site moves into post-development production, however, the company can undertake interim reclamation of the site. 9 In this period, the footprint of staging and storage facilities, water impoundments, and truck traffic should all diminish.
- Daniel Raimi and Richard G. Newell, “Shale Public Finance: Local Government Revenues and Costs Associated with Oil and Gas Development,” Duke University Energy Initiative report (Durham, NC: May 2014), 2. ↩
- Daniel Raimi and Richard G. Newell, “Shale Public Finance,” 3. ↩
- Dutton and Blankenship, “Socioeconomic Effects,” 20. ↩
- Dutton and Blankenship, “Socioeconomic Effects,” 21. ↩
- Jeffrey B Jacquet, “Review of Risks to Communities from Shale Gas Development,” Environmental Science and Technology, published electronically (March 13, 2014), PubMed Central. ↩
- Roxana Witter, Lisa McKenzie, Meredith Towle, Kaylan Stinson, Kenneth Scott, Lee Newman, and John Adgate, Health Impact Assessment for Battlement Mesa, Garfield County, Colorado, University of Colorado School of Public Health (Denver, Colorado: September 2010). ↩
- Jeffrey B Jacquet, “Review of Risks.” ↩
- S. L. Perry, “Using Ethnography to Monitor the Community Health Implications of Onshore Unconventional Oil and Gas Developments: Examples from Pennsylvania’s Marcellus Shale,” New Solutions 23, no. 1 (2013), 33–53. ↩
- While often mandated by state regulations, interim reclamation is not always enforced. ↩