Fracking and foreclosures: Will oil and gas drilling create second housing crisis?
One of the themes that emerged from last week's Republican presidential debate in Nevada – the foreclosure capital of the United States – is that GOP candidates largely don't think the federal government should do much to fix the ongoing housing crisis.
Instead, candidates – if they've said anything at all about housing – feel the real estate market should be allowed to hit rock bottom while the broader economy is stimulated by programs aimed at job growth – especially in energy sectors like oil and gas development and coal mining.
“The idea of the federal government running around and saying, ‘We're going to give you some money for trading in your old car…or we're going to keep banks from foreclosing if you can't make your payments...” candidate and former Massachusetts Gov. Mitt Romney said, “The right course is to let markets work.”
“Mitt Romney's message to Nevada homeowners struggling to pay their mortgage bills is simple: You're on your own, so step aside,” Obama campaign spokesman Ben LaBolt said. “This is just one more indication that while he will bend over backwards to preserve tax breaks for large corporations and tax cuts for millionaires and billionaires, Mitt Romney won't lift a finger to restore economic security for the middle class.”
Texas Gov. Rick Perry wouldn't even touch the foreclosure issue last week, but he has been one of the most strident supporters of rolling back environmental regulations to stimulate domestic energy production and add those high-playing (albeit boom and bust) jobs.
And that approach jibes with Colorado's Republican congressional delegation, with freshmen like Scott Tipton and Cory Gardner talking a lot about domestic energy production but not so much about the housing crisis in Colorado – still among the nation's leaders in foreclosures. Tipton is increasingly on the hot seat for being one of the most ardent supporters of tax subsidies for big oil and gas.
But as hydraulic fracturing has opened up unconventional oil plays in formations like the Niobrara Shale in northern Colorado, places like Weld County are still experiencing high foreclosure rates. And the ensuing land rush and oil and gas leasing frenzy has left some property owners confused and fearful. Perhaps rightfully so.
Banks in New York are now becoming more proactive, in some cases declining to loan money to purchase property unless the buyer agrees not to allow drilling or the oil and gas company agrees to clean up any environmental messes that might lower property values.
“Bankers and real estate executives, especially in New York, are starting to pay closer attention to the fine print and are raising provocative questions, such as: What happens if they lend money for a piece of land that ends up storing the equivalent of an Olympic-size swimming pool filled with toxic wastewater from drilling?” the New York Times reported last week.
Property owners in Colorado have already experienced precipitous declines in property values as a result of drilling activity, the non-profit Checks and Balances Project reports:
“In recent years, landowners in heavily ‘fracked' parts of the country, like Garfield County Colorado, have seen property values plummet. Retirees, like Dee Hoffmeister and Lisa Bracken, have experienced this firsthand. Both of their families have found themselves powerless to pursue any recourse at recovering the damage done to their personal assets.”
So the seemingly unrelated housing crisis and economic recovery via more domestic drilling and mining may actually be mutually exclusive in some areas.
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