"In the last decade, Pennsylvania, West Virginia and Ohio produced a tsunami of natural gas that exceeded even the most optimistic projections.
That wealth of gas was supposed to translate into newly thriving local economies.
According to a report ... by the Ohio River Valley Institute, the local renaissance never happened.
Instead, counties that pumped out nearly all of the Appalachian region’s natural gas lagged on traditional measures of local prosperity: They had less personal income and job growth than the states as a whole and the nation over that time period, and their populations declined.
“It is a case of economic growth without prosperity, the defining characteristic of the resource curse,” the institute said.
The new think tank advocates for the region to shift away from fossil fuel extraction to clean energy.
... Using data from the U.S. Bureau of Economic Analysis, the report looked at 22 counties in the three states between 2008 and 2019, a period when natural gas drilling in the Marcellus and Utica shales began, surged and subsided.
In those years, the region went from being a marginal natural gas producer to one of the world’s largest.
The 22 counties produced 90% of the states’ total gas output during the study period.
Their gross domestic product — the value of the goods and services produced within their borders — grew by 60% over the decade — more than triple the national growth rate.
... Over the study period, jobs in the 22 counties at the heart of the shale boom grew by just 1.7%, compared to 10% nationally and nearly 4% in the three states.
Personal income in the major shale counties increased by 14.3% — roughly on par with the states, but seven percentage points less than the nation as a whole.
Meanwhile, population in the shale counties dropped by 2.4%.
“This extreme disconnect between economic output and local prosperity raises the question of whether the Appalachian natural gas industry is capable of generating or even contributing to broadly shared wellbeing,” the report said.
... The Marcellus Shale Coalition dismissed the report as the work of an activist organization out of touch with the experiences of shale-focused counties, like Washington and Lycoming counties.
... Marcellus Shale Coalition president David Callahan said “independent data ignored in the report” support the economic benefits of natural gas.
... the Marcellus Shale Coalition noted that top shale producing counties — Greene, Susquehanna, Washington, Bradford and Lycoming — performed better than the state as a whole for per capita average income growth over the two-year period.
... John Hanger, a former policy director for Gov. Tom Wolf who led the Pennsylvania Department of Environmental Protection during the first years of shale development, said when he saw the report he found it “shocking.”
It “explodes in a fireball of numbers the claims that the gas industry would bring prosperity to Pennsylvania, Ohio or West Virginia,” he said.
Mr. O’Leary said the economic disconnect may have been obscured by the fact that “the money was real. The money did get invested to drill all the wells and pump all the gas,” he said.
But, “it didn’t land in these local economies.”
RESPONSE TO THE ARTICLE:
"Report on natural gas industry is flawed"
"Natural gas development has been a game-changer for Pennsylvania and the Appalachia region, generating billions in revenue and supporting thousands of good-paying jobs, while lowering household energy costs and driving environmental progress.
Despite these measurable benefits, the Ohio River Valley Institute issued a report claiming shale gas counties saw little job and income growth ...
This grossly misleading report conveniently ignores key economic figures and fails to consider how the industry benefits all sectors of the economy.
... Thanks to shale energy development, the Appalachia region is the third natural gas producer globally, and Pennsylvania is the second top-producing state, translating into jobs and billions in tax revenue.
An analysis by PricewaterhouseCoopers outlines how the natural gas and oil industry is a key economic driver in Pennsylvania, supporting nearly 500,000 jobs and contributing $78 billion to the state’s economy in 2018.
Jobs in the oil and gas upstream sectors nationally had an average salary of $119,573, about twice the average salary of $53,490, in 2019.
Since 2012, the industry has contributed nearly $2 billion in impact fee revenue to all 67 counties for infrastructure and environmental projects.
This report clearly overlooks the family-sustaining jobs and vast economic benefits provided in the Appalachia region.
While some groups are focused on pushing their own agenda, our industry is dedicated to advancing solutions for a cleaner future, delivering affordable, reliable energy and powering our economy."
STEPHANIE CATARINO WISSMAN
Executive Director
American Petroleum Institute Pennsylvania
Harrisburg