Why Fracking Bans Promote Higher Unemployment and Lower Incomes
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The federal equalization program envisioned by Canada had the best of intentions. However, consequences have pushed two provinces to turn away from the most sensible economic opportunities for their areas, reducing job opportunities, incomes, and tax revenues. Two examples of this issue are the ongoing ban imposed on hydraulic fracking in Nova Scotia, and the recently imposed ban on fracking in New Brunswick.
The federal equalization program envisioned by Canada had the best of intentions. However, consequences have pushed two provinces to turn away from the most sensible economic opportunities for their areas, reducing job opportunities, incomes, and tax revenues. Two examples of this issue are the ongoing ban imposed on hydraulic fracking in Nova Scotia, and the recently imposed ban on fracking in New Brunswick.
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Shooting Themselves in the Foot
Natural resource development is an efficient and effective way of aiding prosperity. Although it is impossible to gauge the potential economic benefits of development through natural gas and fracking in New Brunswick and Nova Scotia, research suggests that fracking could potentially introduce a wide range of economic gains to the region.
The Potential Profit of Fracking
According to Nova Scotia’s Department of Energy, the location has ample onshore opportunities for development and exploration. This would be a positive development if allowed to explore and develop those onshore resources.
Nova Scotia’s independent panel for hydraulic fracking provided a scenario that estimated that the development of shale gas could provide hundreds of millions of dollars in additional revenue every year for decades. In addition to the increased revenue for governments, fracking would be able to create thousands of well-paying jobs for the people of the region.
Consider the results shown by Pennsylvania, for example, following the gas boom in the Marcellus region, leading to 28,000 of the highest-paying jobs, attributed to the shale gas sector. The average salary, according to the Department of Labor in Pennsylvania, is around $92,914.
In comparison, the average household income for people in Nova Scotia and New Brunswick is currently $37,456 and $36,373, falling far short of those in places such as Newfoundland ($41,687).
By placing bans on fracking, the governments of New Brunswick and Nova Scotia have essentially refused to pursue any environmentally and socially responsible development of natural resources, even though the region sorely needs the extra tax revenues and jobs. This is just like New York and California that do not care to see job growth in their states and hope something magical happens. Both of these American states are loaded in oil shale but refuse to consider tapping this resource.
Expected Results
Unless things change soon, it seems that citizens of these provinces can expect chronically high unemployment rates, low levels of investment in the private sector, and levels of household income set far below the national average.
Evidence gathered from across North America can act as proof that development of natural resources is an important part of economic growth. However, the equalization program in Canada is continuing to force governments to ignore economic opportunities.
