Sunday, September 28, 2014

2 Cents: Fracking's Great Bounty

Here is some quick math on the latest hyperbole from the industry about the costs of Denton’s fracking ban. This all comes from their own numbers on the recent smiling school kids mailer.
They claim oil and gas contributed $1.26 billion to the Permanent School Fund last fiscal year. There are 304,000 active oil and gas wells in Texas. Clearly, oil wells will produce more revenue for this fund than natural gas wells – Denton doesn’t have oil wells. But let’s assume all wells produce the same returns. That would be $4,144 per well to this fund. That would mean Denton’s 281 gas wells contribute $1.16 million to the fund.
Now even after the ban, Denton’s gas wells will continue in production. New wells won’t be fracked and old wells won’t be re-fracked. Drilling can still occur. It’s hard to say how that will all work out in the future. But let’s take an extreme scenario and assume that lost revenue from fracking after the ban will be equivalent to shutting down all of our wells. Again, that’s extreme and it won’t happen…but let’s give them the benefit of the doubt to help inflate their numbers.
So, assume we lose that $1.16 million contribution to the state fund annually. That fund  pays out on its interest, which is about 10%. So, that’s $116,000. Now, that loss would be spread across the state’s 5 million school children. That amounts to an annual hit of 2 cents per student. The entire cost to DISD would be $540.
Now, the industry likes to talk in terms of ten year periods. So, that would be $5,400.
On their latest mailer, they claim the ban will cost DISD $28.6 million over ten years. That’s 5,296x higher than what even a generous reckoning seems to show. The mailer directs you to their website, but there is no mention there of this $28.6 million figure.*actually see below* 
Gosh, maybe they really don’t care about our children and are just using their smiling faces as a smokescreen to hide their total BS?
If oil and gas is such a windfall for our schools, why does Texas rank 49th in the country on per-student spending? If this boom is such a big deal, why has state funding DECREASED over the past two years by $1,000 per-student? And did you know that the two leaders of the opposition to the ban make more from mineral wealth than our entire school district? You can look that up here.
Could it be that this isn’t really about our schools or our children at all? Might it be that this is about highly concentrated profits for the very few and the very powerful?
After the confusion about their giant figure wore off, anger took its place. How dare they do this?! They are trying to scare us into voting against the health and safety of our children. They are saying that somehow toxic emissions and blowout hazards right next to our homes and schools is good for our kids. On balance, this is a positive thing!? All the pollution and risks are worth it?!
Denton parents and grandparents are the LAST people who deserve to get lectured about suffering for the greater good. Every child in Texas benefits from this school fund, whether or not they have oil and gas wells in their town – or in their back yards. We’ve got 281 of them. Many cities don’t have any. If you crammed all of Texas’ gas wells into the 7% of our land area that is metropolitan, Denton would still have 3x the number of wells as the average city.
We are doing far more than our fair share for this fund.
But here’s the beauty of it. Once we ban fracking and we start building home sites rather than frack sites, we’ll generate way more revenue for our schools. The fact that Texas is ranked 49th despite contributing oil and gas revenues to schools is a good indication that this is not a healthy model for school funding. It is far better to have a robust local economy with a strong tax base, which is precisely what the ban will help us achieve.

*I finally found the infamous $28.6 million figure buried in Appendix D of page 23 of the bogus Perryman Report, which is linked to their site. This appears to be a sleight of hand. This is their estimated increase in tax receipts for DISD from increased drilling activity. But it is NOT the figure they give for lost tax revenue for DISD from the ban. That figure - which is in bold and underlined in red up front on the executive summary is just $4.6 million. If they really thought the $28.6 figure was the cost of the ban, you can be sure they would have put that up front in bold and red.

Most of their assumed losses from the ban are from property taxes. But their own figures show that every acre of fracked land generates less than 25% of the tax revenues of an acre of residential development. Plus homes appreciate in value over time. Frack sites depreciate.

If you want long-term, solid tax revenues for schools, fracking would be low on your list of choices.

Build home sites, not frack sites. Less pollution, more tax revenues for schools.

A better calculation of all this, done later than this original post is here: 


  1. Two cents can add up over time. After all, it's always about the money. Sadly, many people fall for the same talking point that Denton holds the key to our "energy independence." The drill-baby-drill crowd thinks they’re supporting America by lessening our dependence on “foreign oil,” as if it’s not the same people drilling, and profiting from, the foreign oil (ExxonMobil, a Texas company, and Halliburton, a U.S. company that proudly maintains offices in Moscow and the U.A.E., are both involved in a preponderance of “foreign” wells). The following article addresses the real reason we need to continue drilling in the U.S. (hint, it’s not about our energy independence).

    The reason we MUST continue urban drilling was, is, and always will be about money and profits for big oil. Too bad you’re the only one writing about it.

  2. Looking forward, how are we going to transition to renewable energy? I know Denton can make a step in the right direction with the ban, but what about the future? How will the economy cope with the lose of jobs? Are Renewables going to be able to create a new job market? It seems as though we've already dug our grave.

    1. Let's start here:

  3. It's an interesting idea and I guess we'll have to wait to see the effects. Well drilling is important in a lot of areas and drives a lot of the economy in those areas. It seems a little crazy for a lot of us who live in huge cities, but wells are pretty common elsewhere.

  4. Environmental drilling is something that helps us to get the resources that we need. All resource comes from the earth. Drilling can help us to obtain water and oil, even natural gas.

  5. I am always surprised to learn how much drilling we do as a society. It helps us out a lot. It helps the environment and our daily living.

  6. Nice post ….
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  8. Ewidentnie jako drudzy próbę wiercenie studni geolodzy starożytni.
    Eduard Suess sądził, że rozwój nauk o Ziemi przynosi jałowe a wręcz oddstaje wielki zarys naszych przyjaźni wobec poznania naszego miasta oraz pompy do wody.
    Siostrami wierceń są ludzie od odwiertów zajmujący się w spotykania nad odwiertami geologów wiercenie studni zachodniopomorskie.

  9. It is very interesting idea. since drilling is very helpful in getting natural gas, oil etc.Before drilling it is very important to check the proper guidelines of the drilling equipment.

  10. Nice post, it's good to see the difficulty of getting started being recognized. Nice work!

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