Oil and water still don't mix

"You can't believe the flood of money that's pouring into San Antonio!"

That's Steve talking, a close friend and an accountant with his finger on the financial pulse of the nation's seventh largest city. At a time when many other communities are struggling to make ends meet, the Alamo City is flush.

The source of this new pelf lies a couple of hours to its south, down I-35 and US 281, deep in the brush country of south Texas. To be more precise, its origins lie 8,000 feet below the rolling coastal plain, in the gas-and-oil deposits locked in the Eagle Ford Shale formation; this seam runs beneath more 20 counties that stretch from the Rio Grande Valley north and east into central Texas.

To tap those resources, major energy companies (and smaller ones, too), are offering upwards of seven-figures for an annual lease, eye-popping dollars for hardscrabble ranchers who in the past have had to take a second or third job just to hold on to their lands, let alone maintain their livestock operations. To that kind of payday, Steve observed, "not many are saying no."

Ditto for those just seeking a steady paycheck: roughnecks have swelled the population of tiny Cotulla, Dilley, Yorktown, and Cuero and once-quiet Farm-to-Market roads are jammed with fast-moving drilling rigs, pipe-carrying flatbeds, tankers, and shiny pickups. Motels and diners are overwhelmed with business, too, economic activity that has put a lot of money on a lot of tables.

Even in distant San Antonio, which has become the play's service hub for finance, information technology, infrastructure, and transportation. Steve laughed: "Just try renting a truck in town — you can't do it."

This being dusty south Texas, there is a lot of grit beneath that glitter. Used to booms and busts, everyone is waiting for this bubble to pop — and it will. When it does it will have predictable impact on now-inflated prices for food, clothing, and lodging; the sidewalks and streets will empty out. Lots of sorrow after a burst of short-term material gain. Here's hoping that county governments and tax-dependent school districts, currently reveling in their good fortune, have put some of it into rainy-day funds.

More devastating, because they'll be more enduring, are the environmental losses that are already putting the region on edge. The Eagle Ford fossil-fuel strike, like so many around the world, is driven by the hydraulic-fracturing technologies. To capture oil and gas buried so far underground, and trapped in dense shale, energy companies are wielding this new tool to blast under high pressure millions of gallons of water, tons of sand, and a toxic cocktail of chemicals, thereby fracturing the rock and releasing trapped reserves of oil and natural gas; these molecules are then captured and pumped to the surface.

This dynamic system is earning record profits for energy companies like Exxon Mobile and Chesapeake Gas, and service-giant Halliburton, and there is a bit of financial trickle down for the localities in which fracking occurs. In 2010, according to a recent report, Eagle Ford has generated an estimated $3 billion in revenue for producers and local governments.