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Oil, Gas Boom Prompts Water Rate Doubling

The city of Carlsbad, N.M. plans to double water rates for businesses in the wake of a boom in oil and gas production that is using large volumes of the resource.

The southeastern New Mexico city government says it can no longer support the oil and gas industry’s growing demand for water, the Carlsbad Current-Argus reported. The region has been further impacted by a drought.

Carlsbad City Council postponed a vote, to increase the business water rate to $71.43 per thousand gallons, until its Jan. 8 meeting.

The proposal would only affect industrial users, which the city defines as anyone using water for non-domestic purposes, including water hauling, brine production, oilfield servicing, oil and gas production, and resale of water for non-domestic use. Water rates for homeowners and renters wouldn’t be affected.

Oil and gas production uses a lot of water and doubling the rates may help minimize the use of treated drinking water for non-domestic purposes, city administrator Jon Tully told the Carlsbad Current-Argus.

Scarcity issues and growing demand for water treatment will help double the global water services industry’s annual revenues to $1 trillion by 2020, according to a Bank of America Merrill Lynch global research report.

The report said demand for water will outstrip supply by 40 percent by 2030, and close to half of the world’s population will be living in water-stressed areas. Water supplies will be increasingly tapped by agriculture, housing and industry, according to the report.

Water issues have become increasingly costly for companies as well. Water-related challenges negatively affected 53 percent of the world’s largest listed companies in the past five years, up from 38 percent last year, yet there’s been no increase in the number of corporations providing water-related risk assessments to investors, according to the Carbon Disclosure Project.

Photo: From Flickr

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