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Studies raise questions about the actual economic impact of a fracking boom in Ohio



Published: Wed, January 1, 2014 @ 12:00 a.m.

Conflicting estimates emerge about shale’s economic impact

By Tom McParland

tmcparland@vindy.com

YOUNGSTOWN

As the shale play in Northeast Ohio begins to take off, studies emerging from both sides of the hydraulic fracturing debate are painting different pictures about the industry’s impact on the local economy.

Debate surrounding a pair of recent studies shows that the position an organization takes on the process known as fracking can influence both the way information is collected and the way in which it is presented to the public.

One study, a quarterly report released last week by the Ohio Department of Jobs and Family Services, gauged the number of shale-related jobs created in the state by looking at six “core industries” and a group of 30 “ancillary industries.”

The core industries — extraction, drilling, support, pipeline construction and transportation — saw a 30 percent increase in jobs since 2011, the study found. Those figures represented an additional 1,929 jobs added in the two years since shale drilling began in Ohio.

The report also found a 3.8 percent employment increase in ancillary industries, or the various fields that support fracking and are affected by its success.

Energy In Depth Ohio, the public- relations arm for the state’s oil and gas industry, touted the findings on its website. Shawn Bennett, the group’s field director, posted a blog entry under the heading “New Report Shows Major Growth in Ohio Shale Jobs,” and praised the “tremendous 30 percent” bump in core employment.

But not everybody saw those numbers as such a success.

“Thirty percent of a few thousand jobs is not that many,” said Amanda Woodrum, a researcher for Policy Matters Ohio.

Her organization is a part of the Multi-State Shale Research Collaborative, which last month released a report alleging that the fracking industry and its supporters had exaggerated the impact of shale drilling on jobs.

The study looked at job growth in the six states that span the Utica and Marcellus shale formations and accounted only for jobs directly related to shale drilling, excluding figures related to pipeline construction.

Between 2005 and 2012, the study showed, fewer than four new jobs were created for each well drilled, compared with some estimates that each well would generate as many as 31 new jobs.

Woodrum said that Policy Matters Ohio puts the number of jobs created directly from shale drilling at about the same level as the ODJFS study.

But given the development in the state, she said, job growth is not as impressive as fracking advocates have proclaimed.

“An increase from [about 6,000] to 8,000 is a 30 percent increase,” Woodrum said. “But that sounds a lot better than it really is.”

The oil and gas industry has purposely overstated the economic impact of fracking in an effort to start drilling quickly and avoid regulations and taxes, she said.

Bennett said the scope of the MSSRC study was intentionally narrow, excluding broader economic development related to the shale industry.

“The groups behind that initial study are groups that are vehemently opposed to oil and gas development,” Bennett said. “So they intentionally used a very narrow scope.”

He said local shale drilling is currently in its “exploration portion,” and he expects to see rapid growth by 2015, as drilling ramps up.

That would mean an increase in pipeline construction to move natural gas and other supporting industries, Bennett said.

Woodrum said predictions for long-term support jobs leave too much room for speculation. Instead, she expects direct job growth to mirror neighboring Pennsylvania, where she said drilling resulted in about 22,000 new jobs.

“It gives us some kind of realistic way to access where we’re headed,” she said.

But Dr. Matthew Rousu, an economics professor at Susquehanna University who has studied the economic impact of Pennsylvania’s shale industry, said the direct-jobs estimates in his state range from 30,000 to 200,000. Slightly more than half of all new shale jobs, he estimated, have been directly related to fracking.

“Even the 30,000 is an enormous number for one industry,” he said.

Tony Paglia, a spokesman for the Youngstown/Warren Regional Chamber, said direct job growth in the Mahoning Valley so far has been consistent with both studies, but he said that most of the local development has been in industries that boost the drilling supply chain.

“There’s been an increased demand for workers in the manufacturing and building trades,” he said.

He pointed to the example of the Vallourec Star plant in Mahoning County, which produces smaller-diameter stainless-steel pipes that are used for drilling. He credited the Youngstown/Girard facility with creating about 350 direct jobs and 1,800 indirect jobs.

“That shows you what happens when you expand and grow, especially in advanced manufacturing. There’s a multiplier effect,” he said.

Bert Cene, director of the Mahoning and Columbiana Training Association, said focus is increasingly shifting from developing the “transient” direct drilling industry to laying down an infrastructure network to support it.

“Our largest impact has been in support,” he said. “I think that’s more beneficial at this point because those jobs will hopefully sustain,” Cene said.

But the economic benefits of increasing growth in shale drilling’s direct and supporting industries do not come without costs, Woodrum said.

She said an influx of out-of-state workers could diminish the local bounty, while simultaneously driving up rental prices. Heavy trucks transporting products may damage rural roads, and the environmental impact and worker safety both remain big concerns, she said.

To combat the costs of growth, Policy Matters Ohio is lobbying for a severance tax to be levied on oil, natural gas and gas liquids from horizontally fractured shale wells in the state.

“Some of the costs of the industry should be covered by a tax on oil and gas,” Woodrum said.

A bill being considered in Columbus imposes a 1 percent tax, a rate that Policy Matters Ohio says is far too low.

“What is proposed in Ohio is much, much lower than major producing states and lower than most states in the region,” Wendy Patton, senior project director for Policy Matters Ohio, said in a statement.

“Natural resources like oil and gas reside in the land and belong to the people of a state. We fear this proposal undersells a valuable resource that can be taken from the land just once,” she said.


Comments

1bunkpatrol(63 comments)posted 6 months, 3 weeks ago

Follow the money... ...out of state.

Follow the pollution...downstream.

Follow the former drinking water...pumped underground as brine by the billions of gallons.

Smack, crack, or frack. Pick your poison Y-town.

Suggest removal:

2UticaShale(850 comments)posted 6 months, 3 weeks ago

Hey Bunk, right on, I believe everything you say. Kindly show us your qualifications and credentials to support your spewing?

Suggest removal:

3bunkpatrol(63 comments)posted 6 months, 3 weeks ago

Qualifications ? I'll bite ; registered voter, city land owner, taxpayer, college graduate, avid reader, clean water lover, vigilant citizen, with no financial pony in this race, thus no conflict of interest.

But you cant kill this messenger. Our children will remember what their ancestors did or didn't do for profit.

Suggest removal:

4UticaShale(850 comments)posted 6 months, 3 weeks ago

I see, basically another unqualified protester. How much land do you own and what is your degree in?

Suggest removal:

5bunkpatrol(63 comments)posted 6 months, 3 weeks ago

enough of you. go count your money.

Suggest removal:

6UticaShale(850 comments)posted 6 months, 3 weeks ago

Yes, American Free Enterprise, we'll keep counting our money and none for you . Go make your own parasite.

Suggest removal:

7Askmeificare(694 comments)posted 6 months, 2 weeks ago

gdog4766 is mad everyone is talking about puppy mills. Check it out:

http://www.vindy.com/news/2014/jan/09...

Suggest removal:

8HonestAbe(270 comments)posted 6 months ago

Me thinks that someone named UticaShale is a staunch supporter of the transient drilling employees.

Suggest removal:


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