Paul Krugman wrote an editorial, which is linked here.
Paul Krugman got it right. The oil patch isn’t going to save the American economy—it isn’t a jobs program, but it is a death program for those who live near wildcat operations. I deliberately used the term wildcat—they are small operators who frequently do not have either the will to do the job right or the financial strength to clean up the messes they make. Wildcatters punch holes in the ground, and then move on either flat broke or looking for the next exciting play. They are the entrepreneurs of the oil patch, taking risks, and failing at a rate higher than the more established businessmen.
There are responsible operators, generally the larger ones, who do stick to industry best practices (for the most part.) I’m not saying they are altruistic, just that they don’t usually walk away from a mess at a well site, because they have money in the game that needs to be protected. They do exactly what regulations require, nothing more. So if regulations are weak, even they make messes that taxpayers get to fix.
The only thing that Krugman didn’t mention is that the big money in the industry all goes to executives, politicians, with a few traveling rig masters earning a decent living. The new rigs are so complicated that their operators move from site to site—no locals need apply. Hence, the jobs in a local market look like they are going up, but the only impact on the local economy is increased accidents caused by heavy equipment going too fast on county roads, which are torn up—with the damages paid for by local taxes.
Local economies often find themselves in boom and bust cycles, where during the optimism of the boom years building trades boom to accommodate the imported workers and their families, and the local tax payer is stuck with the bill when all those buildings sit empty when the inevitable bust comes. Empty buildings turn into blight, as windows become broken, two and four legged critters invade, and graffiti becomes more prominent than the once proud corporate logos fading in the elements.
Paul Krugman got it right. The oil patch isn’t going to save the American economy—it isn’t a jobs program, but it is a death program for those who live near wildcat operations. I deliberately used the term wildcat—they are small operators who frequently do not have either the will to do the job right or the financial strength to clean up the messes they make. Wildcatters punch holes in the ground, and then move on either flat broke or looking for the next exciting play. They are the entrepreneurs of the oil patch, taking risks, and failing at a rate higher than the more established businessmen.
There are responsible operators, generally the larger ones, who do stick to industry best practices (for the most part.) I’m not saying they are altruistic, just that they don’t usually walk away from a mess at a well site, because they have money in the game that needs to be protected. They do exactly what regulations require, nothing more. So if regulations are weak, even they make messes that taxpayers get to fix.
The only thing that Krugman didn’t mention is that the big money in the industry all goes to executives, politicians, with a few traveling rig masters earning a decent living. The new rigs are so complicated that their operators move from site to site—no locals need apply. Hence, the jobs in a local market look like they are going up, but the only impact on the local economy is increased accidents caused by heavy equipment going too fast on county roads, which are torn up—with the damages paid for by local taxes.
Local economies often find themselves in boom and bust cycles, where during the optimism of the boom years building trades boom to accommodate the imported workers and their families, and the local tax payer is stuck with the bill when all those buildings sit empty when the inevitable bust comes. Empty buildings turn into blight, as windows become broken, two and four legged critters invade, and graffiti becomes more prominent than the once proud corporate logos fading in the elements.
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