Painting a Fuller Picture of Gas Drilling in PA Economy

The folks at the Penn State Marcellus Shale Education & Training Center, a collaboration of the university’s College of Technology and Agriculture Cooperative Extension service, took a look at the Marcellus Shale’s impact on Pennsylvania employment and income in 2009.

So what did they find? The Marcellus Shale is creating jobs, development and increased income, but at a much more modest level than predicted by industry studies. 

The report brings a more detached eye to the question of the economic impact of gas drilling than previous industry-funded reports. It offers a more realistic assessment of the economic effects and contemplates the uncompensated costs to paint a fuller picture of the role of gas drilling to the state’s economy.

The authors surveyed hundreds of businesses, landowners, and government officials; gathered gas industry spending data; and put the information in an economic model to estimate the statewide impact of the industry.

The report makes clear that gas drilling brings additional wealth to leaseholders but that it also brings additional headaches, and costs, to municipal officials struggling with gas-related impacts for which many receive no offsetting tax income.

The report finds that just a little more than one-quarter of businesses in drilling counties have an increase in sales relating to the gas boom. This is not a surprise: manufacturing is still a bigger industry and employs more people than the gas industry in many drilling communities. Many industries remain unaffected by gas extraction yet are vital to our state’s economy.

The reported employment numbers are also more consistent with actual numbers reported regularly by the state Department of Labor and Industry, less sensational than those touted by the industry.

Income and jobs from the Marcellus industry are important to these communities, but they still are a small share of the economy overall. Tax revenue and employment in non-Marcellus counties far exceed that of Marcellus counties, a point the Commonwealth should not overlook in shaping its policies. The economic impact identified by the report is $3.2 billion, which is 0.6% of the state’s total economic output of $547 billion in 2009.

A lack of direct revenue to local governments, plus human, health, and environment impacts alluded to in the report, make the case for a statewide drilling tax, such as that included in many bills before the General Assembly.

Finally, the report is very clear to point out what we don’t know. This includes things like the long-run implications of the development; how fairly benefits and costs are distributed; and the impact on our water, air, public health and quality of life. Only by measuring both the positive impacts and the costs incurred with shale gas drilling can the economic impacts be accurately evaluated.

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