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Oil and gas industry takes a toll on local health care providers

Amy Mall

Posted December 28, 2012

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In addition to the environmental impacts of oil and gas production, including dangerous air and water contamination and destruction of wildlife habitat, NRDC is concerned about other impacts to communities that have been documented, such as increased crime, infrastructure burdens that require massive repair, and the growing demand for social and municipal services. Another serious impact is a large increase in the need for health care services. Communities with oil and gas development can see increased emergency room visits in particular, from traffic and occupational accidents.

A recent report from Tioga County, Pennsylvania, tells of a community-owned not-for-profit hospital that is experiencing its first budget loss in five years, due to workers in the oil and gas industry who do not have health insurance. According to the hospital's CEO, "many subcontractors attracted to the area’s Marcellus Shale drilling boom do not cover employees." Not only should the oil and gas industry clean up its environmental mess, but it should also provide health care insurance to its workers so that taxpayers or those who are insured do not foot the bill. The industry can afford it.

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Clay BurrDec 31 2012 04:45 PM

Obviously uninsured healthare recipients is a problem for communities surging in oil and gas counties, but wouldn't the cost be more then offset by tax revenue and economic stimulation experienced by the creation of oil and gas jobs? It seems to be a net gain, even after the losses are deducted. Communities who are visited by the oil and gas industry are booming. It might be a problem, but it seems to be one worth a solution that does not alienate the people who bringing in jobs and economic growth during these hard times.

Amy MallJan 1 2013 02:15 PM

Hi Clay: I have not seen any economic analysis that has calculated whether revenues outpace costs. In addition to health care services, there are many competing demands for any increased revenues from the oil and gas industry, including road repair, municipal services, the educational system, housing assistance, and regulatory and enforcement capacity. Pennsylvania does not have a severance tax--one of only three in the nation without such a tax.

Clay BurrJan 1 2013 06:50 PM

Hi Amy: I haven't seen one either. If you find one, I'd love to give it a read.

Having grown up in the oil field, I've seen first hand how much the communities thrive with oil and gas jobs. It's not just people in the industry that do well, local businesses unrelated to industry also thrive. We all love it when the oil fields are busy. Of course everybody is paying income, sales, and highway taxes so the local and state governments thrive with the spike in tax revenue.

I do think it's terrible that some of the non-profit medical organizations are struggling because of the increased work load. I hope that they will be able to get some of that money, and maintain their services without having to operate in the red.

It might take a year or two for everything to find a stable equilibrium. That first year or two when it's busy, but the government is yet to see the new revenue and adjust budgets/hire people, can be hard on organizations that rely on public funding. It seems to balance out pretty quick though, and those organizations end up stronger because of increased funding when their piece of the pie comes around.

Oil companies and local service companies have a habit of making generous donations to the communities they operate in. For example, in Artesia, NM there is a local oil company that pays for every local high school graduate's college education, so long as they maintain a reasonable gpa. The company has been doing that for years, and have paid for well over a thousand kid's college education.

Michael BerndtsonJan 2 2013 04:59 PM

Here's my musings and guesses on local economic stimulation for the construction and startup phases of fracking:

Most of the big spending on major equipment and materials goes elsewhere. Expendables and some materials will get purchased from local suppliers who may or may not be national chains like: diesel from Flying J or welding sticks from Graingers. Key workers including site managers, engineers, technical and key trades are typically transplants from elsewhere. Laborers could be local hires depending on the area. Subcontracts for site preparation, earthwork and concrete should benefit local towns the most. Fracking operations principally benefit national suppliers like Baker Tanks, US Silica, etc and national service firms like Clean Harbors for liquids removal. Maybe some local hires are made for truck driving. Per diem for out of town workers goes mainly to lodging, food and travel costs. Most vendors benefiting are national chains, but some are local shops.

I really don't see how health care facilities greatly benefit if workers (temps or not) don't have health insurance - unless someone like Chesapeake, Hess or Baker Tank pick up the Hospital tab for the emergency care as a gracious gesture. My guess is most of the increase in emergency care has less to do with onsite and more to do with offsite donnybrooks and shenanigans - meaning no workers comp.

I'd guess the best way O&G can stimulate a local economy is to contract or subcontract local boutique PR and image consultants - making sure they are paid nicely and with health benefits. And have a good story to tell.

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