The Bureau of Business and Economic Research at West Virginia University has released a study of the economic benefits to the State of the Marcellus Shale natural gas industry, according to an article in the Charleston Gazette. In 2009, the study shows, West Virginia’s natural gas industry generated more than $12 billion in business, created more than 24,000 jobs in the state and paid more than $550 million in wages.
The economic impact of the Marcellus Shale development in the state in 2009 was calculated to be $2.35 billion of business volume and accounted for the generation of 7,600 jobs. Marcellus Shale is believed to hold trillions of cubic feet of natural gas thus the development of the Shale is expected to continue to have a significant economic impact on the state in the future. This report examines these impacts for 2010 to 2015 in addition to the legal, regulatory, and environmental considerations.
Titled “The Economic Impact of the Natural Gas Industry and the Marcellus Shale Development in West Virginia,” the study is available at www.bber.wvu.edu.
West Virginia severance taxes are now 5 percent of the gross value of natural gas production – higher than the other states. However, the new report adds, “For overall state and local tax burden, West Virginia’s general tax policy climate is relatively more conducive to natural gas industry operability than other states with significant Marcellus Shale deposits.”
West Virginia legislators are now considering whether to regulate fracking. The U.S. Environmental Protection Agency is examining the fracking process to determine whether it endangers supplies of drinking water, as many critics argue. Environmental groups, such as the Natural Resources Defense Council, believe Marcellus Shale drilling could have long-term negative environmental impacts.
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I was curious about this study, especially because I’d heard the claim that much of natural gas drilling’s economic stimulus is temporary and doesn’t provide long-term local jobs. I wanted to see if the study accounted for this. After a cursory reading, I was disappointed. Even the “Future Economic impacts…” section did not address this issue. Perhaps I shouldn’t have been surprised though. The first few sentences of interest I found on the title page were: “Funding for this research was provided by the West Virginia Oil and Natural Gas Association (WVONGA). The opinions herein are those of the authors and do not necessarily reflect those of the WVONGA, the West Virginia Higher Education Policy Commission, or the West Virginia University Board of Governors.”
That’s not to say that the document doesn’t provide valuable data and insight. There are some very interesting sections about the tax, environmental, and legal policy issues “facing the natural gas industry and marcellus shale development”.
Overall, the study seems concerned with providing useful and incomplete research to natural gas developers. It does not robustly address the economic impacts of the natural gas industry and marcellus shale development in West Virginia. As such, its title is presumptuous and its claims deeply indicative of how problematic mainstream conceptions of “economy” are.
I found it very irresponsible of the Charleston Gazette reporter to directly quote industry, but not environmental groups, especially considering the quote at the end of the article by Corky DeMarco, director of WVONGA (Oil and Natural Gas Association), “There is no evidence of contamination of water wells from fracking.”
Legally speaking, this is a true statement– the EPA has not concluded their studies to prove whether or not fracking can causes groundwater contamination. But the general population reading the Charleston newspaper probably hasn’t thoroughly researched Marcellus gas drilling all that much, and may look to the newspaper to learn about it. They may not know about the townspeople of Dimmock, Pa whose wells were contaminated with methane after drilling operations commenced nearby (they now have fresh water provided by the drilling company). Or about citizens of Wyoming with similar experiences, including frack chemicals ending up in their wells.