Sustained Outrage

As the Marcellus drilling boom continues, the media reports of almost unlimited jobs and economic impact grow and grow (see here, here, here and here) — with few questions ever asked about where the estimates of the industry’s benefits come from.

Things get especially out of hand when West Virginia political leaders turn to their efforts to tout the potential benefits of getting a “cracker” plant to locate in the state. We’ve tried before to bring some sense to that discussion, and we’ve pointed out that state officials never really finished a legislatively mandated report that was supposed to examine whether the jobs that the Marcellus boom is creating were actually going to West Virginians.

Now comes an important post from PolitiFact Ohio that addresses similar issues in a neighboring state.  The post examines claims by the Ohio Oil and Gas Association that the industry has created 40,000 new jobs in that state:

No source for the jobs figure was given with the ad, which we accessed on April 10, so we called the Oil and Gas Association and asked how it was supported.

They referred us to “America’s New Energy Future,” a report by the global market information and research company IHS, Inc.

Given wide coverage when it was released in December 2012, the report was commissioned by the U.S. Chamber of Commerce’s Energy Institute, the American Petroleum Institute, the American Chemistry Council, America’s Natural Gas Alliance and the Natural Gas Supply Association.

The report includes state-by-state breakdowns on how many jobs have been created and are projected to 2035 due to shale exploration. It refers to horizontal drilling and hydraulic fracturing as unconventional drilling.

Now, keep in mind that this industry-funded study is the same one that many media reports in West Virginia (see here, for example) have cited, and check out what PolitiFact had to say:

The figure of “nearly 40,000” is an accurate reference to the IHS report. And the ad’s reference to jobs “in all walks of life” does indicate that the jobs net is being cast over a wide area not solely restricted to drilling.

But the reality and relevance of the number in the context of the ad is undermined considerably by the fact that it is not the result of surveying but of modeling; that fewer than half of its nearly 40,000 jobs are directly or indirectly related to drilling, and that the single largest element — almost 30 percent of the jobs total — consists of unidentified “induced” jobs.

We think the ad’s reference to the creation of new jobs would reasonably be taken as referring to permanent or continuing jobs, not temporary employment.

Further, the touting of jobs “right here in Ohio” that are “restoring Ohio’s heritage” is not supported by the substantial percentage of jobs going to out-of-state workers, even if that percentage is diminishing.

Finally, the IHS report says its figure of 38,830 jobs refers to total jobs supported by drilling during 2012, not to new jobs created in the year, as the ad claims.

And the words matter. The IHS report itself makes clear that there is a difference between jobs that are “created” by the industry — which, in a generous reckoning, would encompass direct and indirect jobs — and jobs that are “supported,” which would be all of the 21,020 induced jobs.

That’s an important distinction that the ad ignores, and it accounts for more than half the jobs that the ad claims.

So the association has misrepresented its own industry’s study with compounded exaggerations.

The Truth-O-Meter says Pants on Fire!