Sustained Outrage

Gas drillers overstated jobs for Pennsylvania

We’ve talked a lot on this blog about whether the estimates of jobs that could come from a Marcellus Shale gas drilling boom in West Virginia have been overstated (see here, here,  and here).

Now, there’s a fascinating study out from Penn State that looks at whether the drilling boom in Pennsylvania provided the sorts of jobs that industry boosters said it would. The Post-Gazette reported:

Jobs related to natural gas drilling in Pennsylvania’s Marcellus Shale field were about half what previous studies had estimated for 2009, but the industry still supported about 23,500 jobs that year, according to a new study issued by Penn State researchers.

“It’s still big numbers,” said Timothy W. Kelsey, professor of agricultural economics with Penn State’s College of Agricultural Sciences, and one of the study’s authors.

“It’s just not as big as what the industry is talking about.”

Also, the Post-Gazette said:

The study, issued Monday by the Marcellus Shale Education & Training Center, a partnership of the Pennsylvania College of Technology and the Penn State Extension, also said that about half of the land being leased by drillers was owned by people living in those counties in 2009 — the rest was owned by people or firms based out of state or elsewhere in Pennsylvania, or owned by the state itself.

That means much of the leasing and royalty money derived from drilling goes out of the county in which the drilling takes place, according to the study.

It’s an economics phenomenon known as “leakage” — money that looks as if it is benefitting a particular area is actually going elsewhere. And it’s not an economic phenomenon native to gas drilling: Coal interests, limestone and gravel deposits and other mineral-related economic activity is subject to the same kind of leakage.

The Penn State study is available online here.

Interestingly, the Post-Gazette notes:

The study was paid for by funding from state Department of Community and Economic Development and money from Penn State and the Pennsylvania College of Technology.

Readers may recall that the business boosters at West Virginia University produced a gas industry-funded study touting the potential economic benefits of the Marcellus Shale to our state.  Perhaps Senate President Earl Ray Tomblin, acting as governor, will ask his state Development Office or WVU or someone to produce a study similar to the Penn State one — a study that will tell us if the industry’s impacts have kept up with their predictions.