Fracking, fairness, and Ohio's future

Ohio is sitting on a potential pot of gold. According to industry and government estimates, 20 trillion cubic feet of natural gas valued at more than $100 billion, and 1.3 billion to 5.5 billion barrels of oil with a market value of as much as $550 billion, are trapped in Ohio's shale deposits.

Extracting these resources could bring staggering profits to oil companies, a hefty new revenue stream to our state, and tens of thousands of new jobs to our workers. But several problems stand in the way.

The biggest by far involve the environment. Recovering all this gas and oil requires hydraulic fracturing, or "fracking." Toxic chemicals, sand, and huge amounts of water are pumped into horizontally drilled wells under extremely high pressure, to crack the underground rock and release the gas and oil.

A portion of this mixture, called brine, bubbles back to the surface as wastewater. It is typically disposed of by pumping it back into the ground in so-called injection wells.

One of these wells, near Youngstown, is believed to be responsible for a series of earthquakes that have struck the area since last March, including a quake on New Year's Eve. Although that well is temporarily shut down, Ohio has 177 other deep injection wells that accept 37,000 barrels of wastewater a day, from inside and outside the state.

Earthquakes aren't the only problem. Air pollution and groundwater contamination are other possible side effects. Fracking should not be allowed to go forward if it imperils public health and safety. Creating jobs will do little good if we poison our people and destroy our state in the process.

But even if we neutralize the environmental hazards, we can't let fracking's economic benefits flow down a one-way street in the direction of Big Oil. Ohio's natural resources belong to Ohioans, not the oil companies.

Innovation Ohio urges Gov. John Kasich and the General Assembly to adopt three policy recommendations:

Development of a landowners' bill of rights. This measure would ensure that farmers and other landowners who sell mineral rights are not cheated or kept in the dark about chemicals or other hazardous material that will be used on their property, or are left with polluted drinking water, despoiled acreage, and unrepaired damage to access roads and other property.

This month, Ohio Attorney General Mike DeWine said he agreed that more landowner protection is necessary. He announced that he will begin to institute reforms similar to those proposed by Innovation Ohio.

Adoption of a policy that would provide financial incentives to oil companies to hire Ohioans rather than workers from Texas, Louisiana, and other states, as anecdotal evidence suggests is happening in areas where wells are already operating. Ohioans need jobs; we must do everything possible to see they get them.

Enactment of a reasonable windfall-profits tax on oil and gas companies. While Big Oil is poised to pocket billions of dollars, Ohio's severance tax is now the second lowest in the nation -- less than 1 percent on gas and 10 cents a barrel for oil.

Raising severance tax rates just to match those levied in Texas -- 7.5 percent on gas and 4.6 percent on oil and natural gas liquids such as butane and propane -- would mean new revenue over 10 years of nearly $2.5 billion from gas and $6 billion to $25 billion from oil, depending on how much is extracted in what time period. This new revenue stream would cover the increased regulatory and infrastructure costs a full-blown shale boom would impose -- the "impact fee" Governor Kasich seems to favor.

It also would leave plenty of money to reimburse schools and local governments for some of the aid they've lost to state budget cuts. Such taxpayer relief not only would keep communities from having to choose between raising taxes and doing without services, it also would keep local teachers and public safety workers on the job and off the unemployment rolls.

If fracking goes forward, all Ohioans should share in the economic benefits. Oil companies are entitled to earn a fair profit. But regular Ohioans -- landowners, workers, and taxpayers alike -- also deserve a fair share and a fair shake. Our elected officials can't stand passively on the sidelines, or content themselves with being cheerleaders for the oil and gas industry.

Big Oil can look out for itself. Ohioans need someone to look out for them.

Janetta King is president of Innovation Ohio, a Columbus-based progressive think tank. Its report on fracking and Ohio's future is available at innovationohio.org.