Pennsylvania

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Economists question Corbett’s Marcellus Shale jobs claims

Gov. Corbett promoting the Marcellus Shale earlier this year in Williamsport.

Marie Cusick/ StateImpact Pennsylvania

Gov. Corbett promoting the Marcellus Shale earlier this year in Williamsport.

Governor Tom Corbett, who faces tough poll numbers when it comes to his hopes for re-election, formally launched his campaign today in Pittsburgh, highlighting the state’s Marcellus Shale industry as one of the key successes of his time in office.

“The energy industry in Pennsylvania is now supporting the livelihoods of over 200,000 people and their families who work in good-paying middle class jobs,” he told the crowd.

But economists say that jobs number is questionable.

The most recent figures from the state Department of Labor and Industry show 28,155 people working directly in the oil and gas industry.

The 200,000 figure includes workers in ancillary (or related) industries.

In its attempt to quantify the affect of the Marcellus Shale, the state counts every worker in 30 related industries– including every trucker, road construction worker, and steel worker in Pennsylvania.

Penn State professor Tim Kelsey serves as co-director of the university’s Center for Economic and Community Development. He thinks the governor’s jobs estimate is off.

Corbett’s overall figure is seven times the number of direct oil and gas jobs.

“Any multiplier higher than two is looked at pretty suspiciously by economists,” says Kelsey. ”[The state is counting] related sectors, including transportation. So they’re counting FedEx and UPS drivers and long-haul truckers that have nothing to do with Marcellus.”

Bucknell economics professor Thomas Kinnaman agrees.

He says even though the gas industry employs many independent contractors in related jobs (like truck drivers hauling water, for example) and there are other induced effects (like hotels and restaurants seeing more business) Corbett’s number is still questionable.

“In order to justify a number like 200,000 you’d need an optimistic perspective of the industry’s output of gas, you’d need an optimistic view of what the multiplier is, and this industry would have to be very different from other industries,” says Kinnaman.

 

 

Comments

  • Patrick Henderson

    One must seriously wish to do nothing but attack the Governor, the Administration, the legislature who supports responsible shale development, and the economy of Pennsylvania to run an article like this. Unfortunately, StateImpact continues in its crusade of being an “economic denier”. The reality is that the 200,000 plus core and ancillary jobs is actually a conservative estimate. Furthermore, there is no “factor of 7″ being artificially applied. No one extrapolates the “core” jobs – which is a relatively limited number of professions – by simply multiplying it by 7, as the article alludes. The number reflects data collected by the state Department of Labor and Industry’s professionals. It is conservative because it fails to capture induced and other indirect jobs – the third, fourth, fifth ripples in the pond (services, restaurants, hospitality, etc etc). It does not capture the jobs created or retained due to lower energy prices. Yet, that is exactly how our economy works. One “core” job supports ancillary jobs which support indirect jobs which support induced jobs. Don’t just look at the state’s relatively rigid definitions of jobs to gauge impacts – look at estimates from very reputable, credible third party analysts: IHS Global Insight, for one, puts “jobs contribution” of shale gas in PA at 56,800 in 2010, climbing to 111,000 by 2015. IHS further states that industry job growth is increasing by 14% annually, and contributions to the economy of PA by 19% annually. StateImpact has clearly articulated its opposition to natural gas development and economic growth from shale gas – people understand that – but it strains credibility to continually bend over backwards to find fault with every last possible positive statement about the shale energy revolution in PA.

    Patrick Henderson, Energy Executive
    Office of Governor Tom Corbett

    • DeanMarshall

      IHS is Totally Funded in Support of Energy Extraction Industries! Aside from the overblown estimates of jobs, one needs to factor in that 90% of the workers on Frack sites, Pipelines, and major infrastructure projects are imports from Texas, Oklahoma, and in the case in Williamsport, Illegal Aliens from Mexico brought up from Texas and housed in the city secretly until one of the men attempted to lure a little girl off the street! Lastly, Economic growth of any amount will be offset by the cost of cleaning up the environmental destruction this industry brings to every single Shale “Play” they exploit.

    • Scott Brion

      First – it is absurd for the governor to take credit for the success of industry in the state. They are here because the gas is here and this administration has not more to do with the creation of jobs in the industry than does the previous one. And please Mr. Henderson don’t give us the garbage about how an impact fee is benefiting our state. The fact is that lost revenue from a severance tax is cash that leaves the PA economy rather than staying in PA and disadvantages our citizens vs those of all other gas producing states. Take that lost revenue and you don’t even have to multiply any ancillary or induced support jobs to count a whole lot of lost public sector jobs in PA. Does the governor not know why our state’s employment growth lags almost the whole country despite the growth from energy development?

      Second – help my math. In 2010 (at the peak of the boom) IHS predictied increasing drilling activity and 110,000 jobs by 2015 and now in 2013 the number of rigs drilling in PA has fallen by about 50% since 2010 as drilling/ investment and employment growth has slowed dramatically, and the governor is taking credit for 200,000 jobs. So IHS would undoubtedly revise its estimate downward, (and now the math part) – isn’t 110,000 a whole lot less than 200,000?

      Third. I am no economist, but If we are averaging around 1,000 new wells per year (its actually less than that) that is around 200 discreet jobs per well. Seems kinda high considering that all the jobs in the industry work on a lot of different wells each year. Isn’t it true that the numbers you take from the department of labor and statistics as ancillary jobs include a whole lot of jobs that have nothing to to with shale gas development? If not where are all these new workers? I line in Lycoming county and according to the DEP we had 218 new wells from June 2012 to June 2013. assume just less than 10% of the jobs for those well are located out of the area and we should still have about 40,000 new gas related jobs in Lycoming county. Another 40,000 in Bradford county, 35,000 in Susquehanna county and maybe another 20,000 in Tioga. Hmmmm. Either one of every two people who live up here in the hills has a night job that I don’t know about or all those jobs are not where they are drilling gas. So, Mr. Henderson where exactly are all these jobs?

    • paulroden

      Are these permanent jobs? Are these jobs going to PA residents, or to drilling, pipeline, and compressor installers from other states? What happens to local economies after all of these drill rig workers pull out? Who will stay at the hotels, motels and eat at the restaurants? What about the cost of storing and treating all of that “produced water”? What about the cost of all the illnesses and cancer from the contaminated water and air? What about the lung cancer from the radioactive radon in the gas? What about the cost of monitoring the spent wells after the gas is spent? For 10 years of gas it is not cost effective to risk the drinking water of 15 million people in the Delaware Watershed. It is far more better ROI (Return On Investment) to build wind turbines, photovoltaic, biomass convertors for biodiesel, bio-methane and alcohol, small scale hydroelectric, geothermal than fracking. After the initial capital investment, in the infrastructure, except for biomass, the fuel is renewable and won’t escalate in price. If we need this gas so much for our “energy independence” and as a “transition fuel”, why are we building or converting export terminals to sell this natural gas from fracking overseas? Fracking is just like nuclear power, which was once touted as being “too cheap to meter”. It is too dangerous, too expensive and totally unnecessary for our energy needs. If Germany is doing this and will be off nuclear power by 2022 and off of fossil fuel by 2050. Contrary to industry propaganda, Germany is not wrecking its economy nor “starving and freezing in the dark.”

    • nathansooy

      Henderson wrote: “StateImpact has clearly articulated its opposition to natural gas development and economic growth from shale gas…”

      Only if that was the case, Patrick. StateImpact is one of Pennsylvania’s fact-based sources of information on Natural Gas operations. But StateImpact has never advocated against the industry. It reports the facts about the industry.

      Unfortunately, that is rare enough among the press in Pennsylvania. They are to be commended.

      Nathan Sooy
      Clean Water Action, Harrisburg

    • Maggie Henry

      First, responsible shale development is a misnomer, totally nonexistent, there is no such thing! The accounts we have of “accidental” spills, leaks, and “returns to surface”, let alone intentional acts of illegally dumping are absolutely overwhelming and undeniably support this. “Support the economy of Pennsylvania” – easily done with investment in renewable energy, giving jobs to Pennsylvanians, not Texans or Louisianians, manufacturing things we will use in the state. Also lines up with the constitution which the last time I checked gives me the right to clean air and water. The pollution from this industrialization of our agricultural land jeopardizes not only Pa’s # 1 industry, but the water supply our very existence depends on. Let’s talk about the tiny amount of family farms remaining and what shale development will do to land and the crops/livestock produced on that land. No, on second thought, let’s not! For me it is the stuff nightmares are made of. My entire life is invested in the 88 acres we supposedly own, that which we have paid taxes on for darn near a century. The property devaluation, water contamination, air pollution found in close proximity to drilling ( think Dimmock, Woodlands, Tioga, Mercer, Washington, Greene, places where water buffaloes dot the landscape) is just months away from happening in Lawrence and more than I can bear! You sit in your office in Harrisburg and subject the very people you are suppose to be protecting to this vile, toxic existence, turning tax paying Pennsylvanians into environmental refugees! Then you have the unmitigated temerity to revile the only news outlet you don’t control the content of their reporting. You, sir, your governor, your legislature are mere whores for the gas industry and you prove that prostitution is legal for some!

  • William Granche

    Let’s hear him defend the disease, environmental rape and death caused by the industry. Explain why it’s been exempted from the rules of harvesting energy and natural resources for the sole purpose of expedience, profit and or his greed. Finally, a simple one, “Why do drillers face no penalty when they knowingly violate the minimal regulations that exist? In Elk County, the papers reported one of the 4 wells drilled this summer was installed without a blowout protector. How is that anything but willful criminal negligence? Yet the company involved didn’t lose its licence. Had a doctor or teacher or lawyer done a similarly egregious act, they would be incarcerated, but the driller gets a slap on their wrist. For them to feel a fine, it must be real. These people get away with a 10% good will down payment and sent on their way. It’s despicable. Corbett needs impeached or fired soon!

  • MK

    One only has to be on the PA turnpike Friday afternoon to see the hundreds of energy company pickups headed out of state, or on Sunday evening to see them returning, to understand that these jobs are not for Pennsylvanians. Yet, the costs to the community are sustantial. Check each county’s crime rate, and you understand theft, rape, and gun violence are up in the communities hosting energy development. The rents have gone up, the costs for road repairs are exceptionally high for second class townships to finance, and the cost to add police protection in rural areas is adding to the local burden.
    Corbett has given the energy companies all that they have asked for in low taxes and low fees, and the PA residents get stuck with the bills. The largest bill – the cost to clean up subsurface waters – will come later once the energy companies have left.

  • Frank

    From top to bottom….

  • David Nova

    when corbett took office in january 2011, US unemployment was at 9.1%, n PA’s was 8%. as of august 2013, the national rate was 7.3%, while PA was at 7.7%.

  • True Freedom

    What a useless buffoon! Corbett is so in the pocket of the Natural Gas purveyors that anything he says has zero credibility. Why are we, the average citizens of Pennsylvania, carrying the full load on the recently passed transportation bill instead of there being a fair tax on Marcellus Shale that could contribute toward patching up our infrastructure? The roads, already crumbling in parts of the state where fracking is going on, will take a real beating from the trucks and heavy equipment this industry is using. Meanwhile the industry has a sweetheart deal in PA (minus their campaign contributions of course) that leaves us Average Joe’s holding the bag for the repair and refurbishment of our roadways.
    As an aside, how high can they jack up the turnpike tolls? End to end will be like 50 bucks each way!
    I am a lifelong Republican, but I will NOT vote for this idiot and his empty suit Lt. Gov. I don’t care who the Dems put up, he or she will have my vote.

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