First Choice Energy

Thursday, May 17, 2012

Activists Latch Onto New Figures, Claim That Economy is Ruined By Drilling - More Objective View Shows Otherwise

New government data gives deeper insight into the impact that the recession had on Pennsylvania counties.  Energy Policy Forum was quick to latch onto a statement in the article and then write a report of their own about the data.  Then Water Defense tweeted a link to EPF's article:


But is that really what the research reveals?  Let's take a closer look.

The report, originally posted on StandardSpeaker, said this about the overall data:
Average income statewide and earnings in three regional counties decreased during the harshest segment of a severe recession, new government data show.
The data illuminate the hardship and disarray brought about by the economic depression, which technically ran from December 2007 to June 2009 and originated in a housing crisis fueled by subprime mortgage loans.
That is the real premise of the article.  It only touches briefly on any connection to the oil and gas development in Susquehanna County:
Shale-gas development also had minimal impact on Susquehanna County income, even though the region is among the state's most-heavily drilled. The county's average income decreased from 2008 to 2010, its unemployment rose by 3.2 percentage points and poverty increase from 2000 to 2010.

Gas development was still emerging during the period and few Susquehanna County residents initially found employment in the industry, said Dennis Phelps, executive director of TREHAB, a Montrose-based agency that provides services to the poor, unemployed and elderly in six counties, including Susquehanna, Wayne and Wyoming.

"Everybody was rolling in from out of the area," he said. "It was easier to bring people in from Texas, Oklahoma and Arkansas than do the training here."
While some of the information about what dates are being used to pull this data is vague, what is being ignored by Energy Policy Forum and Water Defense is the fact that this article is only referring to a period between 2008 and 2010.  Is it accurate to say that fracking has brought economic ruin (we'll leave aside the heavily debated idea of whether it has contaminated water in Dimock, or the economic impact of certain parties perpetuating the notion that Dimock's water is toxic) to the county?

First of all it is important to note, as the original article from StandardSpeaker does, that "gas development was still emerging during the period" covered by the data being considered.  That is very accurate, as the numbers reveal.  We'll come back to that in a minute.

So let's look at the unemployment figures.  According to the U.S. Bureau of Labor Statistics, the unemployment rate in Susquehanna County was 6.1% in January 2008, while unemployment for all of Pennsylvania was at 5.3%.

It did rise as high as 10.9% in February 2010, an increase of 4.8%, while PA as a whole had climbed to 9.5% (an increase of 4.2%).  During those two years, 92 Marcellus Shale wells were drilled in Susquehanna County.  But what happened next?

From January 2010 to August 2011, 246 wells were drilled in the county.  By August 2011, unemployment in Susquehanna dropped to 7.2%, a 3.7% reduction.  Meanwhile PA as a whole was at 8.2%, having dropped just 1.3% during that same period.

As of the latest unemployment data available there from the Bureau of Labor, which was for March 2012, Susquehanna was at 7.6% and PA was at 7.7%.  That doesn't seem that bad for a county that has consistently had a much higher unemployment rate than the state as a whole over the past 20 years.

Clearly, the oil and gas drilling has not ruined the economy in the area.  The report below further demonstrates the positive impacts it has had, including tax income for the area and more insight on the effect it's had on jobs.

Does this mean that the economic impact has measured up to many of the projections and estimates made by the industry when they were beginning drilling?  That would be a stretch, and that is a fair argument to be made.  But to say that the economy was ruined by the shale development, and to ignore the other half of the story here (what happened economically from 2010-2011) is so asinine that it only serves to invalidate anything of substance that someone has to say.  And that statement isn't limited to fracktivists - industry advocates are often guilty of the same things.

So if you see a headline related to gas drilling, make sure that you read the article closely to try and sort out the bias, because rarely is there an article written on this topic that isn't greatly distorted by one.  One would be foolish to expect the economic impacts in the area to equal what energy companies like to post as estimates, but it would be equally foolish to take anything fracktivists say at face value.

Economic Impacts in Susquehanna County 2010


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