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Energy Development and Its Impact on Farms and Farm Households

Anna Stehle, Damona Doye and, James Williamson (March, 2016)

Summary

Lease and royalty income from oil, gas and wind production has the potential to improve the well being of farm households and farm businesses by contributing to current and future income. It may influence farm management decisions, for example, by providing funds to expand an operation or by providing income to assist the transition of older farmers into retirement. In Oklahoma, oil, gas and wind energy payments are known to impact farms and farm families. When statements are made in an Extension meeting hypothesizing that a lot of Oklahoma farmland has been paid for by royalty income, many heads nod in agreement. The recent uptick in horizontal drilling and hydraulic fracturing and associated royalty payments has contributed to a landscape dotted with new homes. An agricultural lender recently described a scene with a truck selling furniture in a community too small to have a furniture store.