Tuesday, May 28, 2013

Gas Drilling Creates Winners and Losers: Duke Study Finds Drilling Hurts & Helps Property Values In PA

Does gas drilling reduce or increase the value of nearby homes? It's a deceptively simple question.  Done by Duke University and Resources For the Future, a study of 19,000 properties in Washington County, Pennsylvania from 2004-2009 provides data that thrill and annoy all sides of the fracking wars.

At page 5 of their study, the researchers say the following:

"Using this identification strategy along with data on property
sales in Washington County, Pennsylvania, from 2004 to 2009, we find that
properties are positively affected by the drilling of a shale gas well unless the
property depends on groundwater."

Indeed, it is a big "unless."  The researchers find that gas drilling gives and takes.

The winners include those homeowners who have a water utility provide their water.  The property values of homes supplied by water lines go up 10.4% after gas drilling.  The losers include homeowners who rely on private water wells who see their property values drop 23.6%.

Hopefully, Duke or other researchers do more studies on the impact of gas drilling on property values in more places in Pennsylvania and outside it.  The single study is interesting but limited by its focus on just Washington County and sales that took place more than 4 years ago.

This study, however, reminds one more time of a fundamental truth about gas drilling and all energy development--it creates both winners and losers. This fact is why every state but Pennsylvania has enacted a gas drilling tax in order to create widespread benefits for all citizens of a state that host gas production.


  1. I believe once a community has had their water impacted by gas extraction the responsible company should be required to provide a permanent water supply to that community. Hmmm don't we have a LAW that requires that?

  2. Concerned ScientistMay 29, 2013 at 8:45 PM

    John this paper is a piece of junk. you can tell by the introduction where multiple discredited studies are referenced or misquoted. Osborn et al showed that well water was NOT contaminated by frack fluids. The EPA did not show that fracking had contaminated an aquifer. The Myers paper was perhaps the most dishonest of all of the pseudoscience that has been done on the topic.

    The authors strongly imply that fracking is contaminating groundwater in the normal course of business. We used to be able to count on you to expose these charlatans. This belongs on the scrap heap with the Howarth papers and hte NYTimes articles and Gasland. It's rubbish. And hardly any drilling had taken place there in 2009!! It's worse than useless.

    1. I agree that the Myers paper is junk. But that and the other papers you mention are not relevant to the research in this paper. The paper is about property values. The paper actually finds that property values rose because of gas drilling and property values fell because of gas drilling. What was the difference? Whether a property had water service from a water line or water well. Purchase prices of homes are impacted by a variety of factors--rational and irrational perhaps. But this paper looks like it did a professional job in controlling for factors. Again it has data that will thrill and annoy all sides.

  3. Concerned ScientistMay 29, 2013 at 9:17 PM

    I thought about this for a minute - what happened between 2004 and 2009? The real estate bubble burst! Home values plummeted in most parts of the country. Please.

    1. Again, it finds that values of homes served by water lines increased. It controlled for a variety of factors. But I said in the post that it would be good to see more studies done in the current market and in more places, in addition to Washington County PA. I personally am not surprised by a study that finds gas drilling can increase and decrease property values. It is industrial process that some folks will want to avoid completely. There are spills and accidents at the surface. Methane has migrated as a result of casing and cementing mistakes. On the other hand, royalty checks and lease payments have led to improvements in homes and farms that should increase values of property too. Anyone who thinks gas drilling is all good or all bad is seeing just one side of the impacts. There are positive and negative impacts but some want to deny one or the other. And then there is the next question, how do those impacts on the environment, national security, and the economy compare to coal, oil, nuclear, ethanol, hydro, biomass, wind, solar, geothermal? The facts and truth of this issue will annoy those who are determined to present just one side.

    2. Concerned ScientistMay 30, 2013 at 1:59 PM

      I agree with you to a point. And I am strongly for wind, solar and geothermal along with gas. I want to see us get off coal as fast as possible, then oil. I still think that the study is flawed. It should have included more recent data. It should not have referenced discredited studies. It strongly implies that groundwater is being contaminated in a widespread way and by not specifically stating that the cases of contamination are virtually all methane migration they imply that chemicals from fracking are getting in the groundwater. this paper will be held up as proof that gas drilling is driving property values down due to contamination of water supplies. I would not be surprised if it was funded by the PArk Foundation.

      I have actually heard that it is hard to find real estate to buy in the active areas due to the influx of workers and that real estate costs have gone up across the board. That would have been since 2009 though.