Low Job Count in PA Marcellus Shale Development

W. PA. Marcellus Operations

Marcellus Jobs in Pennsylvania

From the Article by Deborah Rogers, Energy Policy Forum, 2-4-13

Much has been claimed by the oil and gas industry with regard to job creation from shale development. It has been stated repeatedly that as many as 600,000 jobs will be generated by shale production. 

But these numbers are based on economic models which, when assessed, were found to include jobs such as strippers and prostitutes in the mix. Arguably this is job creation, just not the sort that most Americans would prefer to acknowledge. Or indeed create.

In September 2008, Mr. John Hanger then Secretary of the PA-DEP stated during House Environmental Resources and Energy Committee Testimony:

“Developing [Marcellus] resources not only will build on our continuing efforts to develop more homegrown energy resources that are cleaner and better for the environment, but also could lead to billions of dollars in new economic investment for Pennsylvania’s communities, as well as tens of thousands of new jobs.” Four years later, in July 2012, Mr. Hanger was still publicly proclaiming the job creation benefits of shales. He stated in a blog post which was subsequently promoted by industry: “Low natural gas prices and the gas boom are creating desperately needed jobs directly and indirectly.”

In December, 2012, Mr. Hanger gave another glowing endorsement of yet another shale gas report commissioned and paid for by the oil and gas industry. Mr. Hanger stated: “IHS Global Insight finds that shale gas development has created 103,000 jobs in Pennsylvania…The Commonwealth ranks second in shale gas jobs, behind Texas, according to the IHS new report that was funded in part by the oil and gas industry.”

And then Mr. Hanger, the candidate for governor, emerged. Suddenly, it was admitted: “Pennsylvania needs more than 6 million jobs to be at full employment, and so, if the IHS report is near the mark, the gas industry is providing less than 2% of the jobs Pennsylvania needs.”

And a few more lines down, Mr. Hanger admits: “Since January 2011, Pennsylvania has the worse job performance of any state with a major oil and gas boom.” Humorously, by January, 2013, Mr. Hanger the candidate had found his scapegoat: “[Governor Corbett's] failure is also rooted in a mistaken belief that gas drilling and gas production alone can bring Pennsylvania a broad prosperity. ..Pennsylvania requires approximately 6.5 million jobs to be at full employment. Counting direct and indirect jobs created by gas drilling, gas drilling provides less than 2% of the jobs needed.” Imagine that! You gotta love politics!

Careful consideration should be paid to such statements for the following reason. Taking Mr. Hanger’s position as an example, a position which has spanned a number of years, one can now see the obvious admissions and faulty reckoning upon which policy has been based:

Admission 1: When it was convenient, Mr. Hanger relied on job reports commissioned and paid for by the oil and gas industry which possessed an inherent bias. Industry stood to gain monetarily, therefore numbers were almost certainly inflated.

Admission 2: Mr. Hanger chose to rely upon a priori arguments from industry based on spurious economic models. What is truly interesting about this, however, is that in these models all direct and indirect jobs claimed, in spite of probable exaggeration, only account for less than 2% of the needed jobs for the State of Pennsylvania. Ergo, gas drilling was never going to make much of a difference in Pennsylvania’s employment rate.

Admission 3: Unemployment is growing in Pennsylvania in spite of its self proclaimed “booming” Marcellus shale production. Ah, now we get to the a posteriori argument based on fact rather than theory.

Admission 4: “Pennsylvania has the worse job performance of any state with a major oil and gas boom”.

If only for these reasons, politics is useful. Self interest finally reveals the real jobs numbers after all these years. Too bad that so much poor policy has been put into place in the meantime.

Deborah Rodgers, founder Energy Policy Forum