By Kristen Walker. American Consumer Institute
Roughly 65 percent of Americans oppose the construction of an artificial intelligence (AI) data center in their communities. Fears of resource allocation, environmental footprints, and a perceived lack of transparency have taken hold and continue to escalate. Data center construction has been canceled in numerous locations, and many counties and states are enacting pauses or moratoriums.
This backlash is reminiscent of the fracking panic which propagated in the 2010s. When extracting trapped oil and gas from dense rock formations became viable through the technological advances of horizontal drilling and seismic imaging—therefore substantially increasing our petroleum reserves—not everyone was on board. Air and water pollution fears as well as other community disruption concerns emerged. Protests, sit-ins, and blockades sprouted across the U.S.
Some cities and states prohibited fracking, but others embraced the breakthrough. Both data center opponents and advocates would be wise to learn a few lessons from the fracking era.
Those that welcomed fracking experienced economic prosperity.
Texas benefits from several major shale formations, and the Lonestar state took advantage. The boom brought significant financial growth and infrastructure investments. Local property and sales tax revenue exploded in rural communities. Eagle Ford Shale specifically delivered a $61 billion economic impact to its multi-county area in 2012, pumping $1 billion a week into the state economy and bringing 116,000 jobs. Household incomes rose, populations surged, and unemployment declined.
Further north, the shale boom put the small Midwest town of Williston on the map, making North Dakota the second biggest oil-producing state. Williston’s population nearly doubled, job growth exploded, median income increased, and retail expansion swelled. The economic success translated into significant tax revenue allowing the city and surrounding areas to manage the growing pains and expand municipal infrastructure and public services. The rural agricultural community transitioned into a steady, large-scale energy production hub.
The Marcellus Shale in the Northeast illustrates a stark contrast between those that took advantage of hydraulic fracturing and those that did not. The richest and most extractable sections lie underneath portions of northern Pennsylvania and southwestern New York and are estimated to contain up to 500 trillion cubic feet of natural gas. Pennsylvania capitalized on fracking; New York banned it.
A Heritage Foundation study concluded that New York “stripped their constituents of lucrative income associated with hydraulic fracturing,” causing residents in their southern counties to lose out on $11,000 per person ($27,000 per household). Pennsylvania on the other hand experienced significant job creation and income growth. Whereas New York counties had consistently reported higher GDP per capita than Pennsylvania prior to fracking, this trend reversed when the former rejected the industry and the latter embraced it.
Ironically, nearly 85 percent of New York’s energy is imported; a large share of their natural gas comes from Pennsylvania, the second top producer in the country. New York’s electricity prices are the fourth highest in the continental U.S., roughly 62 percent higher than the national average, and nearly 40 percent higher than Pennsylvania (from whom they buy energy). Imagine if they produced their own.
States that banned fracking have forfeited potential fossil fuel economic output and lower energy costs, royalty revenues, localized industry jobs tied to shale extraction, expanded retail investment, and local and state tax revenue.
A recent report forecasts America’s fate had the shale boom been entirely rejected. A “significant economic transformation of the 21st century,” the U.S. has saved $800 billion each year, avoided higher inflation, reduced emissions, and made the country more energy secure. As if gas prices and electric bills aren’t currently high enough, they’d be much worse.
Public concerns surrounding data centers are valid. Fracking anxieties allowed federal and local regulators to implement regulations that address and mitigate shale’s environmental impacts; stringent requirements are enforced. The same principles can and should apply to data centers.
National, state, and local leaders should carefully consider how they respond to data center fears. With the right planning and execution, data centers can serve and enhance the communities they’re in. They already have. Municipalities across the U.S. are thriving because data centers are bringing jobs, tax revenue, and economic expansion.
Counties are lowering residential tax rates, upgrading infrastructure, building new schools, and attracting new industries because of this single sector. Data center developers are even entering agreements to finance the upgrade and buildout of electric grid systems and networks.
Lawmakers would be wise not to squander the opportunities, fiscal stability, and economic boon the data industry can bring.
Kristen Walker is Senior Policy Analyst and Manager for Energy and Transportation with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow on X @ConsumerPal.
