Fracking boon could boost Obama in Ohio

9:08 AM, Jul 24, 2012   |    comments
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YOUNGSTOWN, Ohio (CBS NEWS) - It was about 35 years ago that the steel industry - and, with it, this northeast Ohio town - began to fall apart.

The steel companies that had long dominated the local economy - U.S. Steel, Republic Steel, Youngstown Sheet and Tube - were closing, downsizing or leaving. Steel was being produced more cheaply in China, in Texas and Indiana, in newer facilities that put the aging plants in and around Youngstown to shame. By the year 2000, 50,000 mill-related jobs and half the population were gone; most of the downtown storefronts were boarded up. The city had become a symbol of Rust Belt economic decay, the subject of a mournful Bruce Springsteen song, a soot-stained ghost town without a future.

But then came something very few people expected: The first glimmers of a comeback. That had a lot to do with people like Phil Kidd, who returned to Youngstown in 2004 after a stint in the Army; earlier this month, he opened a store downtown called "Youngstown Nation" dedicated to reinvigorating the community. The efforts of Kidd and activists like him have helped transform downtown Youngstown into an increasingly vibrant place, one where new restaurants and coffee shops have sprung up in once-vacant storefronts. The poor have by no means disappeared - one 2011 study found Youngstown had a nearly 50 percent concentrated poverty rate, ranking it first in the nation - but they're now outnumbered on downtown streets by people earning a paycheck. Over the past two years, the unemployment rate in Youngstown has fallen from 13 percent to 7.4 percent, according to The Youngstown/Warren Regional Chamber.  

"We have a long ways to go," said Mike Avey, 52, who owns Joe Maxx Coffee off the main square downtown. "We're probably a baby just starting to walk."

Driving the region's burgeoning economic resurgence are two industries, both of which are already having a significant impact on the presidential race. The first is automotive: A massive General Motors plant in nearby Lordstown, where the Chevrolet Cruze is manufactured, employs thousands. The plant faced potential extinction when GM filed for bankruptcy in 2009; after the company's Obama administration-assisted reemergence, it restored its third shift.

The second factor is the rise of the natural gas extraction process called hydraulic fracturing - "fracking" - which boosters believe can replace steel as the region's economic engine. Fracking entails pumping a mixture of water, sand and chemicals thousands of feet underground into shale rock formations at high pressure, cracking the shale and releasing the natural gas and petroleum trapped within it. Technological advances over the past decade have made it possible to capture this gas and oil, and there is an awful lot of it to be had: The two dominant shale formations in the region, the Marcellus shale and Utica shale, are believed to hold tens of trillions of cubic feet of natural gas.

Local business leaders have been enthusiastic in their embrace of fracking. "That's a long time coming, and that creates optimism," said Thomas Humphries, president of the Youngstown/Warren Regional Chamber. The industry has already created more than a thousand jobs in the region thanks in part to a European company called Vallourec SA, whose V&M Star unit will soon begin operating a new $650 million mill to manufacture the steel tubes used in extracting the natural gas. (Mr. Obama visited the facility, which was built thanks in part to $20 million in federal stimulus funding, in 2010.) Regional homeowners, meanwhile, are cashing in by selling their mineral rights. In an election year in which voters overwhelmingly cite the economy as their top concern, the economic boom tied to fracking could be a significant advantage for President Obama over Mitt Romney in Ohio as well as Pennsylvania.

Environmentalists say Youngstown's business leaders are ignoring the risks of fracking in their rush to grab onto an economic lifeline. They note that the region has already experienced a series of small earthquakes believed to be tied to the disposal of fracking waste water into local injection wells.

"Where they target first is poor areas [like Youngstown], because they wave the money under people's noses," said local environmental activist Lynn Anderson, who says she is ignored at city council meetings when she brings up her concerns. "It's a lot of money and nobody's looking toward the future. Like we're not going to have water to drink."

Anderson is referencing claims that fracking can lead to the contamination of drinking water from either methane gas or the seepage of the fluid that is a byproduct of the fracking process - known as brine - into aquifers. (The anti-fracking documentary "Gasland" featured the memorable image of methane-contaminated tap water being lit on fire.) Industry and business leaders maintain that fracking, when done properly, does not corrupt drinking water and is in fact far more environmentally friendly than energy production from coal.

Both sides have at times overstated their case. It can be difficult to tell just how much of an environmental risk is posed by fracking because the industry has developed so quickly that scientists have not had enough time to fully study its potential impact.

"Despite the millions of posts on blogs and such, there's very little research, and the reason I think is that scientists work very slowly, we need to assess data and do all the work," says Duke University professor Avner Vengosh, who has found causes for concern in his research. "The rate of exploration and the rate of development in the last five years was crazy and very fast if you compare it to how the scientific community has been able to work with it."

Despite the concerns of environmentalists, who generally support the Democratic Party, President Obama has been largely supportive of fracking. In May, his administration issued a rule requiring that companies disclose the chemicals used in drilling on public land - but, in a concession to the industry, they must only do so after the drilling is completed. The president has taken steps to streamline regulation of fracking, and the Environmental Protection Agency has altered rules to make it easier for the industry to comply, in part by giving drillers more time to invest in equipment to reduce pollution from fracking wells. (Most fracking is regulated not by the federal government but on a state basis, because most drilling takes place on private land.)

During his State of the Union Address in January, Mr. Obama noted that there is enough natural gas in the ground to power America for a century.

"And my administration will take every possible action to safely develop this energy," he said. "Experts believe this will support more than 600,000 jobs by the end of the decade."

Those words did not stop his presumptive general election opponent from casting the president as hostile to the industry.

"This president has eight different agencies trying to fight their way to become regulators of the gas-extraction technology known as fracking," Mitt Romney said in Pennsylvania in April. "And the intent, of course, is to slow down the development of our own resources."  In March, Romney wrote in the Columbus (Ohio) Dispatch that he "will respect states' proven ability to regulate fracking, rather than sending federal bureaucrats to take control."

But with the industry thriving, Republicans appear to realize they will have a hard time gaining traction by casting the president as anti-fracking. In Ohio, the GOP message on energy has largely been that Mr. Obama has been hostile to coal - a far easier case to make in light of that industry's struggles.

There were less than 100 fracking wells in Ohio at the start of this year; by the end of 2015, Bloomberg reports, the Ohio Natural Resources Department estimates there will be more than 2,000. A February study by the Ohio Shale Coalition estimated that the industry will bring the state more than 65,000 jobs and nearly $5 billion in economic output in the year 2014.

Those are the sort of figures that prompt politicians from both parties to shy away from regulation for fear of being seen as standing in the way of desperately-needed economic revitalization. In Youngstown, where memories of the darkest years times remain fresh, locals see fracking as their best chance to achieve what was unimaginable a decade ago: A return to the boom times.

"The elected officials in this area, the business community are embracing it," said Tony Paglia, Vice President of Government Affairs at the Youngstown/Warren Regional Chamber of Commerce. "Because they see the benefits are going to far outweigh any problems that could emerge."

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