from Ohio State University’s College of Food, Agricultural and Environmental Sciences news release Study prepared by doctoral student Amanda Weinstein & Mark Partridge, Swank Chair of Rural-Urban Policy in Ohio State’s Department of Agricultural, Environmental and Development Economics
Weinstein and Partridge wrote their study in response to a recent oil industry-funded study by Kleinhenz and Associates predicting 200,000 jobs resulting from the development of shale natural gas and oil in Ohio. OSU’s researchers would adjust that figure to 10 % of the prediction—20,000 jobs over the next four years.
The discrepancy arises from the industry’s use of techniques typically used by consultants that are not accepted as best practices for such analyses. “There are well-accepted techniques for coming up with these numbers. They are not typically used in industry reports, but in academic circles (where) they are acknowledged as being much more accurate,” Partridge reports.
Additionally, Weinstein says the industry-funded analysis misguidedly focused on jobs rather than other factors related to the growing industry. The energy sector is more capital-intensive than labor-intensive. As such, Ohio shouldn’t expect it to have a huge impact on employment growth. “Any growth in jobs is good,” she concluded, “but this development just won’t provide the entire answer for Ohio.”
The researchers examined employment and income in several Pennsylvania counties involved in shale gas drilling. Per capita income generally increased rapidly in shale gas areas, but job growth hasn’t always been higher compared to similar areas not involved in the drilling.
Weinstein and Partridge believe the most important message individuals and communities need to understand is that shale energy development is a boom/bust cycle. Partridge warns that pre-planning is needed to handle the bust part of the cycle. “On the local level . . . there’s a sudden influx of money—from lease payments, platform construction, that sort of thing,” Partridge says. “It’s a real gold-rush mentality. But what communities really want and need is long-term development. Typically, energy booms don’t provide that kind of sustainable growth.”
Seeing an abrupt invasion of out-of-town workers filling up nearby motels, hotels and restaurants, the instinct may be to provide more housing or provisions for the workers. But that type of infrastructure won’t be needed after the initial phases of development.
“Then,“ Partridge says, “someone has to do the maintenance and upkeep. The problem is that most communities are distracted by the short-term gains they’re experiencing rather than keeping their eyes on the long-term.
“They should work with industry to ensure it pays for new roads and infrastructure it needs to do business. They should figure out ways to capitalize on the new money to build schools or other community assets. They need to think about ensuring they have a long-term financial plan that will provide a cushion as the boom moves out of their area.”
A final point the researchers make is that because shale gas is a cleaner source of energy than is coal, it will probably replace coal energy and result in the loss of many coal-related jobs. Such a displacement must be accounted for in any economic analyses.
You can read the entire study at http://go.osu.edu/shalejobs
For text and photos of the experience in the Hickory, PA, community, go to http://www.donnan.com/Marcellus-Gas_Hickory.htm