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From an Article by Nick Cunningham, DeSmog Blog, February 11, 2021
The fracking boom has received broad support from politicians across the aisle in Appalachia due to dreams of enormous job creation, but a report released on February 10 from Pennsylvania-based economic and sustainability think tank, the Ohio River Valley Institute (ORVI), sheds new light on the reality of this hype.
The report looked at how 22 counties across West Virginia, Pennsylvania, and Ohio — accounting for 90 percent of the region’s natural gas production — fared during the fracking boom. It found that counties that saw the most drilling ended up with weaker job growth and declining populations compared to other parts of Appalachia and the nation as a whole.
Shale gas production from Appalachia exploded from minimal levels a little over a decade ago, to more than 32 billion cubic feet per day (Bcf/d) in 2019, or roughly 40 percent of the nation’s total output. During this time, between 2008 and 2019, GDP across these 22 counties grew three times faster than that of the nation as a whole. However, based on a variety of metrics for actual economic prosperity — such as job growth, population growth, and the region’s share of national income — the region fell further behind than the rest of the country.
Between 2008 and 2019, the number of jobs across the U.S. expanded by 10 percent, according to the ORVI report, but in Ohio, Pennsylvania, and West Virginia, job growth only grew by 4 percent. More glaringly, the 22 gas-producing counties in those three states — ground-zero for the drilling boom — only experienced 1.7 percent job growth.
“What’s really disturbing is that these disappointing results came about at a time when the region’s natural gas industry was operating at full capacity. So it’s hard to imagine a scenario in which the results would be better,” said Sean O’Leary, the report’s author.
The report cited Belmont County, Ohio, as a particularly shocking case. Belmont County has received more than a third of all natural gas investment in the state, and accounts for more than a third of the state’s gas production. The industry also accounts for about 60 percent of the county’s economy. Because of the boom, the county’s GDP grew five times faster than the national rate. And yet, the county saw a 7 percent decline in jobs and a 2 percent decline in population over the past decade.
“This report documents that many Marcellus and Utica region fracking gas counties typically have lost both population and jobs from 2008 to 2019,” said John Hanger, former Pennsylvania secretary of Environmental Protection, commenting on the report. “This report explodes in a fireball of numbers the claims that the gas industry would bring prosperity to Pennsylvania, Ohio, or West Virginia. These are stubborn facts that indicate gas drilling has done the opposite in most of the top drilling counties.”
A Boom Without Job Growth
This lack of job growth was not what the industry promised. A 2010 study from the American Petroleum Institute predicted that Pennsylvania would see more than 211,000 jobs created by 2020 due to the fracking boom, while West Virginia would see an additional 43,000 jobs. Studies like these were widely cited by politicians as proof that the fracking boom was an economic imperative and must be supported.
But the Ohio River Valley Institute report reveals the disconnect between a drilling boom and rising GDP on the one hand, and worse local employment outcomes on the other. There are likely many reasons for this disconnect related to the long list of negative externalities associated with fracking: The boom-and-bust nature of extractive industries creates risks for other business sectors, such as extreme economic volatility, deterring new businesses or expansions of existing ones; meanwhile air, water, and noise pollution negatively impact the health and environment of residents living nearby.
“There can be no mistake that the closer people live to shale gas development, the higher their risk for poor health outcomes,” Alison Steele, Executive Director of the Southwest Pennsylvania Environmental Health Project, told DeSmog. “More than two dozen peer-reviewed epidemiological studies show a correlation between living near shale gas development and a host of health issues, such as worsening asthmas, heart failure hospitalizations, premature births, and babies born with low birth weights and birth defects.”
Moreover, oil and gas drilling is capital-intensive, not job-intensive. As the example of Belmont County shows, only about 12 percent of income generated by the gas industry can be attributable to wages and employment, while in other sectors, on average, more than half of income goes to workers.
In other words, it costs a lot of money to drill, but it doesn’t employ a lot of people, and much of the income is siphoned off to shareholders. To top it off, equipment and people are imported from outside the region — many of the jobs created went to workers brought in from places such as Texas and Oklahoma.
Despite the huge increase in shale gas production over the past decade, the vast majority of the 22 counties experiencing the drilling boom also experienced “economic stagnation or outright decline and depopulation,” the report said.
“[W]e could see long ago that the job numbers published and pushed out by the industry years ago were based in bluster, not our economic realities,” Veronica Coptis, Executive Director of Coalfield Justice, a non-profit based in southwest Pennsylvania, told DeSmog, commenting on the report. “At industry’s behest and encouragement, Pennsylvania promoted shale gas development aggressively in rural areas for more than a decade. And yet, the southwestern counties at the epicenter of fracking do not show any obvious improvement in well-being.”
Petrochemicals Also a False Hope
After natural gas prices fell sharply amid a glut of supply beginning in 2012, the number of wells drilled began to slow. Industry proponents then pinned their hopes on a new future: plastics. Petrochemical facilities would process low-cost natural gas into the building blocks of plastic and spur a virtuous cycle of new manufacturing while prolonging the drilling boom.
But the petrochemical promise has mostly been a mirage. Most of the proposed ethane crackers have been cancelled or delayed. Only one has moved forward: Shell’s ethane cracker in Beaver County, Pennsylvania, which was lured to the state with a $1.6 billion tax credit, the largest tax break in Pennsylvania history.
Even in Beaver County, job growth has been anemic: the county saw employment actually contract by 0.5 percent between 2008 and 2019, despite breaking ground on Appalachia’s flagship petrochemical facility, according to ORVI. In reality, the Shell cracker will employ several thousand people temporarily during construction, but only employ 600 people permanently when it comes online.
The market for petrochemicals has soured dramatically since Shell gave the greenlight on the project several years ago, raising doubts about future growth. And yet, in 2020, the Pennsylvania legislature passed another $667 million tax credit intended to lure in more petrochemical facilities to the state. Democratic Governor Tom Wolf supported it.
As the ORVI report concluded: “[P]olicymakers should look very critically at proposals to expand or otherwise assist the natural gas industry, which has yet to demonstrate that it is capable of contributing positively locally or on a large scale to the states and counties where it is most prevalent.”
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{ 3 comments… read them below or add one }
The report should have looked at the economic impact on one very small sector: politicians “representing” the counties and states affected. I suspect they’d find that these people did very well financially as a result of greenlighting and pushing the industry.
Consider the Case of PA Rep. Fred Keller
Letter to the Williamsport Sun Gazette, Feb 18, 2021
In his opinion piece about the energy industry published in the Sun Gazette on Feb. 6, our U.S. Rep. Fred Keller built his case on partisanship, exaggerations, and lies, in my view. He wrote: “Pennsylvania’s statewide energy sector now sustains more than 300,000 jobs, pays more than $23 billion in wages, contributes $45 billion to the commonwealth’s economy, and saves the average household $1,100 every year in energy costs.” This is directly from a study that was commissioned by the Marcellus Shale Coalition. It was heavily criticized when it came out and now can’t be found on the Coalition’s website.
Statistics for the last quarter of 2000 from Pennsylvania’s Department of Labor and Industry paint quite another picture. Gas and oil drilling jobs are reported under the category Logging and Mining, the extraction industries. This has always been the smallest economic category in the state, tiny in comparison to others. Before the gas industry came to Pennsylvania there were about 18,000 jobs in logging and mining. Last December stats showed a gain of a little over 5,000 prior to fracking.
It is difficult to believe that 5,000 or even 10,000 direct jobs could “sustain more than 300,000 jobs.” The actual number of jobs in the gas industry are little more than a rounding error in the state’s 5.6 million workforce.
Rep. Keller has joined a long line of shills that I believe the petroleum industry has recruited to obscure the basic truth that they have a very low need for workers. They promise jobs they can’t supply and have had academics and people in power to wildly inflate those estimates.
When the gas drilling industry came to our region they armored themselves with hype. You might remember these, “the goose that lays the golden egg, a game changer, a generational employment opportunity.” Using these they were able to stave off a severance tax, replacing it with a far less costly impact fee.
Local developers and investors became light-headed with the prospect of thousands of gas drillers flooding into the area. They used their own money and credit to build hotel space and lodgings for what turned out to be a phantom workforce. Much of that living space now sits unoccupied. That private money could have been used on projects that would have benefited the local economy.
Keller wrote: “Energy companies have been outstanding partners in our communities and have helped make great strides in improving rural health care, schools, infrastructure, and downstream job opportunities in hotels, restaurants, and other industries.”
How did Williamsport’s economic zone fair with gas drilling? Again, quoting Labor and Industry, “in the last 10 years Williamsport has lost about 28 percent of it goods producing jobs and 7 percent of service jobs.” Williamsport has lost 5,900 jobs or 11.1 percent of its workforce. As for the extraction industries, “the largest percentage change (in the last five years) was a drop of 21.7 percent in mining and logging.”
Williamsport is beset with problems including a depressed economy, a high rate of poverty, aging housing stock and crumbling infrastructure. None of this is helped by Fred Keller pandering to what appears to be a dying industry.
I have a request for my Republican friends. Local politics assures that the 12th District Representative will be a Republican seat so it is your responsibility to pick that person. It is hard to believe that Fred Keller is the best you can do.
JON BOGLE, Williamsport, PA
Source: https://www.sungazette.com/opinion/letters/2021/02/rep-fred-keller/
How the Biden administration could create jobs for oil and gas workers
From Sarah Kennedy, Yale Climate Connections, February 22, 2021
An oil or gas well can keep releasing pollution long after it’s retired from use.
“When an oil and gas company walks away from a well that had been producing and does not plug it … [that] can impose heavy environmental and climate costs,” says Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.
He co-authored a recent report on inactive, unplugged wells. “They can leak methane, which is a potent greenhouse gas into the air, as well as other harmful air pollutants,” he says.
According to the EPA, there are more than 2 million unplugged inactive wells in the United States. Bordoff says that together, they emit as much carbon pollution as 2 million passenger vehicles per year.
President Biden has pledged to establish a program to plug many of these inactive wells. Bordoff says this approach could create employment for oil and gas workers who lost jobs during the coronavirus pandemic.
“Many workers have lost their jobs and are struggling, and if they have a skill set that can be used to help the environment by plugging these wells, that can be a dual benefit,” Bordoff says. “You’re putting people back to work in a period of high unemployment until the economy is back on its feet, and you’re providing an environmental benefit.”
https://yaleclimateconnections.org/2021/02/how-the-biden-administration-could-create-jobs-for-oil-and-gas-workers/