Those of us who recognize the many grave dangers that fracking poses to our environment and social fabric have often felt that we were in a real David vs. Goliath struggle, but without the benefit of the sling that enabled David to topple the giant. Recent developments indicate that we may have not one,but two Goliaths entering the fray on our side.
Our two unlikely champions are the insurance providers and the mortgage bankers.
Here’s how Nationwide Mutual Insurance put it in an internal memo:
“After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage.”
This applies to
….landowners who lease land for shale gas drilling and contractors involved in fracking operations, including those who haul water to and from drill sites; pipe and lumber haulers; and operators of bulldozers, dump trucks and other vehicles used in drill site preparation.
Other insurers are growing increasingly uncomfortable with the difficulty of calculating potential damages from fracking, and, while insurance for gas and oil companies is still available, the cost is rising.
But, for banks that issue mortgages, no price is right. Leasing mortgaged property for fracking without approval of the bank that holds the mortgage is a violation of the terms of most mortgages, and could lead to foreclosure, because fracking may create a hazard on the property, such as a toxic tailings pond, polluted wells and springs, or other hazards that devalue the land. Even if the water supply escapes contamination, the evidence shows that fracked properties lose value–who wants to buy a home in an industrial sacrifice zone? The switch from bird songs and fireflies to pump motors and gas flares may be “the sound of money,” to some people, but it’s not what most people who move to the country want to hear. A Cornell University study of fracking in Pennsylvania found that:
noise is a major concern related to compressor stations: they produce noise levels in the 85 to 95 decibel range. These levels are at or above the federal Occupational Safety and Health Administration (OSHA) threshold of safety for an 8-hour day, and compressors work a 24-hour day. These environmental “stressors” can have an effect on adjacent property values or on regional industries….
…such as tourism. A New York Department of Environmental Conservation study noted that
… property values in (a fracked) region… generally rise because of an influx of drilling company workers, increased economic activity, and the value of the oil and gas. But once mineral rights are signed away or if drilling takes place nearby, the value of residential properties may drop. In conclusion…being in proximity to a well could reduce the value of a property,
Rising property values are not a tide that lifts all boats. They frequently sink the boats of the poor and underprivileged. As the Cornell study observed,
Driven by the high wages of workers in the mining sector and their increased demand for goods and services, local prices increased by twice the national rate over the six-year study period….This is especially true of rental housing. Rents skyrocket, (and) local renters who cannot afford their apartment any longer are displaced….
“In some places in Pennsylvania a gallon of milk costs $7.” That’s twice the national average.