Contact: Dr. Michelle Haefele: [email protected] (303) 650‐5818 ext. 109 Threats to Landscape and Lifestyle: The Not‐So‐Hidden Costs to Communities of Oil and Gas Development As we have learned (time and again), the boom and bust cycle that occurs with oil and gas development comes with a cost in terms of the quality of life for towns in proximity to development. The rapid increase in population and changes in the focus of the local economy not only place financial burdens on local governments, but also fundamentally alters the nature of the community. And when the boom is over, communities are left with damaged landscapes, unstable economies and the loss of social fabric. It is important that communities advocate for sensible development to protect their lifestyle. The Fiscal Costs to Communities of Oil and Gas Development: Western communities learned twenty years ago that boom‐times are not all good times. While there may be new jobs and income flowing in, communities experiencing a boom in oil and gas drilling also experience great social upheaval as drilling crews and workers migrate into the area (Merrifield 1984, Davenport and Davenport 1980; Limerick et al. 2002). 
Increased demand for housing raises prices during boom periods, leading to increased poverty among those not able to take advantage of new jobs (Brabant and Gramling 1997). 
The influx of workers brings an increase in crime, domestic violence, drug abuse and other social problems, resulting in both economic costs to manage these problems and bigger changes to communities (Kittredge, 1987, Kelly 1980). 
Providing basic services for a rapidly growing population, along with the increased costs associated with the increase in social problems noted above, places added financial burdens on local governments during booms. Between 2000 and 2008, communities throughout the West have been reliving the boomtown impacts that they experienced a quarter century ago (Pinedale Anticline Working Group 2005, Pederson Planning Consultants 2001). 
Once‐quiet ranching, farming, or tourist towns have become unrecognizable by long‐time residents (“Gas boom ruining my town” Denver Post, August 13, 2006; “Sublette County cowtown kowtows to energy boom” Planet Jackson Hole, Jackson WY, April 21, 2006; “Police cope with growing crime from boom” Associated Press, March, 2006) 
Housing becomes unaffordable and difficult to find, creating problems for long‐term residents and migrating gas‐field workers alike (“County considering zoning change for worker camps” Glenwood Springs Post‐Independent, CO, April 19, 2006) 
In other cases the presence of oil and natural gas wells and facilities has caused property values to decline, ruining people’s dream homes and investments (“Real estate values hit by well drilling” Denver Post, October 24, 2005; BBC Research and Consulting, 2001). A peer‐reviewed study by economist in Alberta found that the potential health hazards associated with oil and gas facilities as well as the mere presence of such facilities in the vicinity were correlated with lower property values (Boxall et al. 2005). 
Roads that were built to handle smaller volumes of traffic are now seeing more accidents and are requiring more frequent, costly repairs (Pinedale Anticline Working Group 2005; Pederson Planning Consultants 2001; “Boom hits county roads” Casper Star‐Tribune, Wyoming, December 13, 2006) 
The network of roads built to serve the gas fields in the Pinedale, Wyoming area have also increased access for poachers, threatening the wildlife that is a mainstay of the region’s hunting and fishing tourism industry (“Blame it on the boom?” Casper Star‐Tribune, January 7 2007; “Poachers busy in energy fields” Casper Star‐Tribune, June 10, 2006) 
Many of the boomtowns are experiencing a rise in drug use and drug‐related crimes that either corresponds with the new gas development or is, in some cases, directly linked to the gas fields (“Boomtown Blues” by Alexandra Fuller, The New Yorker, February 5, 2007; “Meth in the oil fields” Farmington Daily Times, New Mexico, September 16, 2006; “Meth and oil and gas: A troubling storm” Farmington Daily Times, August 25, 2006; “Oil, drugs don’t mix” Deseret Morning News, Utah, June 19, 2006) Cohen et al. (2007) describe an increase in methamphetamine production on the nation’s public lands, citing documents from the National Drug Intelligence Center. In boom towns where the demands of the drilling schedule inspire increasing meth use, it is also likely that some of this new demand for the drug might be met with production from the surrounding public lands. Cohen et al. describe three interrelated threats due to production on public lands: damage to the environment due to toxic byproducts; danger to the public who use these lands for recreation, both from the toxic waste and potential encounters with criminals; and potential economic losses to gateway communities, stemming both from a loss of tourism as people are discouraged from visiting and from an increased demand for emergency and social services. There are also some indications that the boom may be ending. High natural gas prices made drilling in the Rocky Mountains profitable, but prices have been falling in recent years leading to a slowdown in drilling activity. (“CBM play moving past Campbell County” Denver Post, December 5, 2006; “Energy cool‐down” Rocky Mountain News, Denver CO, November 1, 2006). See Figure 1. 2
FIGURE 1. New Oil and Gas Wells Drilled on Public Lands
in the Rocky Mountain Region
While the number of wells drilled in the region has increased overall, there is also a clear cycle of boom and bust – closely tied to the price of natural gas, and completely outside of local communities’ control.
6,000
5,000
New Wells Drilled
$8
Annual U.S. Wellhead price for Natural Gas ($/Mcf)
$7
4,000
New Wells Drilled
$6
$5
3,000
$4
2,000
$3
$2
1,000
$1
0
Annual U.S. Wellhead Price for Natural Gas ($/Thous cubic feet)
$9
$0
1995
1997
1999
2001 2003 2005*
Fiscal Year
2007
2009
* Due to a shutdown of the Automated Fluid Minerals Support System in 2005, data are incomplete for this fiscal year. If these data were included, the number of wells drilled in this period would be even greater. Source: U.S. Department of the Interior, Bureau of Land Management, Public Lands Statistics
Oil and gas development is notorious for resulting in cycles of boom and bust which can have devastating impacts on Western communities. Research has indicated that an emphasis on resource extraction results in inherently economically unstable communities (Fortmann et al. 1989, Freudenburg 1992, Freudenburg and Gramling 1994). This instability is usually a result of labor saving technological improvements and fluctuations in world resource markets ‐‐ forces completely outside local control. Such economic instability and lack of local control can be expected with rapid oil and gas development. It is generally the rapid changes in population in the initial years following the opening of an area for oil and gas development that result in the social, financial, and community disruption and dissatisfaction often noted in boomtowns (Smith, et. al 2001; Brown, et. al 2005, Goldsmith 1992, Guilliford 1989, Merrifield 1984). Protecting the Local Lifestyle: 3
Communities can avoid or significantly lessen the short and long‐term costs of oil and gas development by preventing unchecked development, so that the core characteristics of the community and its economy are preserved. Local government has an important voice in decisions made by the federal agencies regarding the size and scale of oil and gas drilling. Local government and leaders can ensure that the potential costs to their community (as described above) are taken into account when decision‐makers weigh the costs and benefits of different alternatives for managing oil and gas development. Communities can also gain some control over these impacts when phased development, which controls the scale and pace at which drilling occurs, is implemented (Haefele and Morton 2009). Federal agencies can require phased development and local voices can advocate for these requirements to be imposed, focusing on the important reduction in costs to the local community. 
With rapid oil and gas development communities often receive a large influx of new revenue in a very short time, followed by a rapid decline in this revenue stream as the drilling and production slows down. When the development of the resource is phased to take place over longer time horizons the annual revenue will be smaller, but the revenue stream will continue for many years, allowing for more predictable long‐term community planning. 
Revenue to the local government will be spread out over a longer time allowing for a longer, more predicable, stable revenue stream. 
Costs will also be moderated when drilling is phased. Fewer wells (and the attendant infrastructure) drilled in any given year will mean fewer negative impacts at each point in time. 
The drilling phase of oil and gas development generally results in a higher demand for labor than the subsequent production phase, therefore with rapid development there is a pronounced "peak" in new employment as new wells are drilled. Such a peak in labor demand often results in a rapid temporary influx of population to an area, resulting in many of the tangible and intangible costs of boom town development. Slower development results in fewer new jobs in any given year, but the added oil and gas employment continues for a longer period. 
Extending the period over which the development takes place will allow communities to better absorb the social and economic impacts of oil and gas development. The potential influx of new residents will be dampened, at the same time local residents will be more likely to have time to acquire the skills necessary to take advantage of the employment opportunities that drilling and production may bring. This may reduce many of the negative social impacts of rapid oil and gas drilling and reduce the added costs to communities. References: BBC Research and Consulting. November 12, 2001. Measuring the Impact of Coalbed Methane Wells on Property Values, Appendix B of the La Plata County Impact Report (Appendix B: http://co.laplata.co.us/pdf/plan_doc/final_impactrpt/final_ir_appb.pdf, Full report: http://co.laplata.co.us/publications.htm ) Boxall, P.C., W.H. Chan, M.L. McMillan. 2005. The impact of oil and natural gas facilities on rural residential property values: a spatial hedonic analysis. Resource and Energy Economics 27: 248‐
269. 4
Brabant, Sarah and Robert Gramling 1997. Resource extraction and fluctuations in poverty: A case study. Society & Natural Resources 10(1):97‐106. Brown, Ralph, B., Shawn F. Dorius, Richard S. Krannich. 2005. The boom‐bust‐recovery cycle: Dynamics of change in community satisfaction and social integration in Delta, Utah. Rural Sociology 70(1):28‐49. Cohen, K., N. Sanyal, G.E. Reed. 2007. Methamphetamine production on public lands: threats and responses. Society & Natural Resources 20(3):261‐270. Davenport, Joseph III and Judith Ann Davenport (eds). 1980. The Boom Town: Problems and Promises in the Energy Vortex. Laramie WY: University of Wyoming, Department of Social Work. Fortmann, L.P. et al. 1989. Community stability: The foresters' fig leaf. In D.C. Le Master and J.H. Beuter (Eds.) Community Stability in Forest‐based Economies. Portland OR: Timber Press. Freudenburg, W.R. 1992. Addictive economies: extractive industries and vulnerable localities in a changing world economy. Rural Sociology 57:305‐332. Freudenburg, W.R. and R. Gramling. 1994. Natural resources and rural poverty: A closer look. Society and Natural Resources 7:5‐22 Goldsmith, O.S. 1992. Economic instability in petroleum‐based economies. Presented at OPEC/Alaska Conference on Energy Issues in the 1990’s. Anchorage AK, July 23‐24, 1992. Guilliford, Andrew. 1989. Boomtown Blues: Colorado Oil Shale 1885‐1985. Niwot, CO: University Press of Colorado. Haefele, M. and P. Morton. 2009. The influence of the pace and scale of energy development on communities: Lessons from the natural gas drilling boom in the Rocky Mountains. Western Economics Forum 8(2): 1‐13. Kelly, James. 1980. Rocky Mountain High. Time. December 15: 28‐41. Kittredge, William. 1987. Overthrust Dreams. In: Owning It All. Saint Paul, MN: Grey Wolf Press. Limerick, Patricia N., William Travis, and Tamar Scoggin. 2002. Boom and bust in the American West. Workshop Report. Center of the American West, University of Colorado, Boulder, CO. Available at: http://www.centerwest.org/boom_bust.html Merrifield, John. 1984. Impact mitigation in western energy boomtowns. Growth and Change 15(2):23‐28. Pederson Planning Consultants, 2001. Appendix D in the Wyoming Energy Commission, Preliminary Progress Report to the Wyoming Legislature, Joint Minerals, Business and Economic Development Committee, December 14, 2001. Draft Report commission by the Wyoming Energy Commission. 34 pages. Pinedale Anticline Working Group. 2005. BLM Pinedale Anticline Working Group PAWG Task Groups’ Report. Smith, Michael D., Richard S. Krannich, and Lori M. Hunter. 2001. Growth, decline, stability, and disruption: A longitudinal analysis of social well‐being in four western rural communities. Rural Sociology 66(3): 425‐450. 5