Posted January 07, 2012 in Press Releases
As Ohio seeks to cash in on expanded oil and natural-gas exploration and production, it needs stronger rules governing drilling procedures to protect Ohioans' health and safety.
Gov. John Kasich's administration cannot dismiss new seismic evidence that draws potential links between the controversial process of hydraulic fracturing, or fracking, and earthquakes. Nor can the governor ignore the costs of better roads and other improvements that the anticipated drilling frenzy will demand. He needs to be willing to raise the revenue to meet those demands and enforce environmental rules by appropriately taxing those who are so eager to extract Ohio's mineral wealth.
Fracking uses toxic chemicals, sand, and lots of water, under high pressure, to fracture underground rock to get at trapped oil and natural gas. Although the technology has been around for decades, a new technique shows promise in getting to vast reserves in the Marcellus and Utica shale regions of northeastern and central Ohio. Mr. Kasich says he sees great job-creation potential in fracking.
The governor's new director of the Ohio Department of Natural Resources, Jim Zehringer, deserves credit for temporarily banning injection of waste products from fracking within five miles of a Youngstown well that has been linked to 11 earthquakes in nine months, including one last Saturday. That decision will give local residents some peace of mind as state officials study seismic evidence.
But Governor Kasich's commitment to public and environmental health can't stop there. He must keep his promise to do fracking right, economically as well as environmentally, despite the pleas of industry lobbyists.
Ohio's severance tax on oil and natural-gas drillers is less than 1 percent of the value of what they extract; that rate is near the bottom of 35 states that levy such a tax. Ohio could collect as much as $538 million in new tax revenue between now and 2015 if it matched Michigan and West Virginia, which have a 5 percent severance tax, according to the nonpartisan think tank Policy Matters Ohio.
The Kasich administration seems receptive to at least a modest increase in the tax, although it is reluctant to state how much. But Ohio's oil and gas industry is hot because of the reserves that have become available; a 5 percent severance tax would not dissuade producers. If Ohio fails to increase its severance tax on drillers, taxpayers will bear the burden of drilling's higher costs.
Eighty years ago, Ohio's first drilling frenzy went from boom to bust. Bad drilling techniques wrecked northwest Ohio wells so much that a mass industry exodus to Texas and Oklahoma ensued.
Officials no longer can use the industry's growing pains as an excuse. They must use the best available science to establish pollution safeguards to govern fracking that are strong enough to protect the state's drinking water.
They need to develop and enforce effective rules for proper disposal of toxic materials. They must create a trust fund into which oil and gas companies will pay their fair share of tax revenue to cover production costs.
Ohio's potential oil and gas drilling boom presents exciting opportunities, but also myriad challenges. Governor Kasich must appropriately balance both sets of prospects.