Hydraulic fracturing, commonly called “fracking,” has created an energy revolution for the oil and gas industries in states such as North Dakota, Ohio, Pennsylvania, and West Virginia. If governments take advantage of these significant economic opportunities, fracking-related industries could provide the United States with a competitive advantage over the rest of the world for many years to come.
In a recent Somewhat Reasonable article, Steve Goreham, the executive director of the Climate Science Coalition of America, explains how the production of oil and natural gas extracted from shale is changing the world. “We are witnessing a modern energy miracle,” Goreham said. “For more than 30 years, U.S. crude oil production fell from 9.6 million barrels per day in 1970 to five million barrels per day in 2008. Oil production, an annual $200 billion industry, was in long-term decline. Industry experts proclaimed that we had reached ‘peak oil’ and that world oil output would soon fall. But beginning in 2008, U.S. production soared, again reaching 9.6 million barrels in June of this year, recovering all of a 30-year decline in just seven short years.”
Silica sand, often referred to as “frac sand,” is found most prominently in Minnesota and Wisconsin and has been mined for more than a century to manufacture many products, such as window glass, water filtration products, and abrasives. Demand for the sand has grown rapidly in recent years, because it is also used in the hydraulic fracturing process. The social impact of sand-mining operations, including their impact on land use, scenic beauty, and property values, has become a sensitive topic as of late, with many frac-sand opponents focusing on emotion and opinion, rather than scientific data.
In a recent Heartland Policy Study titled “Social Impacts of Industrial Silica Sand (Frac Sand) Mining: Land Use and Value,” Heartland Institute Research Fellow Isaac Orr and Mark Krumenacher, a senior principal and senior vice president of GZA GeoEnvironmental, Inc., respond to claims made by frac sand opponents using established scientific facts.
In their study, Orr and Krumenacher briefly discuss the importance of mining and raw materials to modern Americans’ lives and explore concerns commonly expressed about mining as an industry. They describe four ways local elected officials can understand the emotional reactions a community might have to a proposed new development – mental noise, perception of threats, elements of trust, and dominance of negatives – all of which can make it difficult for individuals to examine an issue rationally and can cause them to become unnecessarily concerned.
Orr and Krumenacher determine in this Policy Study, “Although opponents of mining often cite the potential impacts of sand mining on property values as a reason to restrict or ban mining operations, this Policy Study concludes many mining companies are already addressing these concerns with local officials, who have adequate tools at their disposal to manage the impact of sand mining on their communities.”
This is the fourth Policy Study addressing frac-sand mining topics from The Heartland Institute. The three previous studies are: “Environmental Impacts of Industrial Silica Sand (Frac Sand) Mining” (May 2015), “Economic Impacts of Industrial Silica Sand (Frac Sand) Mining” (June 2015), and “Roadway Impacts of Industrial Silica Sand (Frac Sand) Mining” (September 2015).
What We’re Working On
Budget & Tax
Puerto Rico Announces Plans to Default on Bond Payments
Gabrielle Cintorino reports in the Heartlander about a planned move by lawmakers in Puerto Rico to partially default on $1 billion in monthly bond payments owed to investors in state-owned corporations, such as the territory’s Public Finance Corporation and the Puerto Rico Infrastructure Financing Authority. Cintorino examines the possible effects of a default and how Puerto Rico’s budget has quickly grown out of control. Read more
Research & Commentary: Convention of States Proposal in Indiana
Indiana is currently considering a proposed multiple-amendment application for an Article V convention to amend the U.S. Constitution. If an Article V convention is called for by the states, it would be limited to considering constitutional amendments that would require the federal government to enact a balanced budget, impose term limits on members of Congress, or would mandate the reduction of federal regulations. In this Research & Commentary, Kyle Maichle, Heartland’s project manager for constitutional reform, argues states have an obligation to address the threat caused by the national government’s inaction on many important issues: “Calling for an Article V convention is one way to help move the public discussion forward and to effectively put pressure on Congress to take action.” Read more
Study: School Vouchers May Lead to Lasting Positive Outcomes
Heather Kays, policy advisor to The Heartland Institute, reports on a new Brookings Institution/Harvard University study that confirms a positive long-term effect of school vouchers for minority children. One of the study’s authors told Kays, “[The study] provide[s] the first experimental estimates of the long-term impacts of a voucher to attend private school by linking data from a privately sponsored voucher initiative in New York City, which awarded the scholarships by lottery to low-income families, to administrative records on college enrollment and degree attainment. … We [found] substantial, marginally significant impacts [from the voucher program] for minority students and large, significant impacts for the children of women born in the United States.” Read more
Energy & Environment
Research & Commentary: Local Control of Fracking in Florida
In January, the Florida House of Representatives voted to pass a bill that would prevent local governments from banning or placing moratoria on the practice of hydraulic fracturing, commonly called “fracking,” in their jurisdictions. The legislation mandates “all matters relating to the regulation of the exploration, development, production, processing, storage, and transportation of oil and gas are preempted to the state.” Forty-one different cities and 27 counties in Florida have voted to ban fracking or have expressed their opposition to it since January 2015. In this Research & Commentary, Policy Analyst Tim Benson writes fracking has already been utilized in Florida for many years in a safe, environmentally responsible manner, and he says state governments are uniquely qualified to work with environmental and industry leaders to craft legislation that protects the environment while maintaining the vibrancy of the oil and gas industry. Read more
Nebraska Medicaid Expansion Would Cost $1 Billion
Michael Hamilton, research fellow and the managing editor of Health Care News, writes in Somewhat Reasonable about another Medicaid expansion proposal being considered by Nebraska legislators. Hamilton argues the cost of expansion is high, citing a report from Optumas, a private actuarial firm that analyzed the 10-year cost of state Sen. John McCollister’s (R-Omaha) bill to expand Medicaid by adopting a Transitional Health Insurance Program. The Optumas study found even with federal assistance, the 10-year cost of Nebraska’s share for the proposed Medicaid expansion plan would reach almost $1 billion. Read more
From Our Free-Market Friends
Medicaid Provider Taxes: Gimmick Adds Tens of Billions in Medicaid Spending
A new study by Mercatus Center Senior Research Fellow Brian Blase examines states’ use of accounting schemes to inflate federal Medicaid reimbursements. The study concentrates on the largest of the current schemes: provider taxes, which are assessments levied on health care providers, often accompanied with the explicit or implicit guarantee of increased Medicaid payments to those same providers and financed by the federal matching funds. In the study, author Brian Blase wrote, “Provider taxes shift costs from states to the federal government, but they also raise overall spending by lowering the relative price of Medicaid expenditures to states. Provider taxes make state Medicaid programs cheaper because the revenue raised – even though the revenue is generally illusory – can be used as the state share of spending.” Read more