Source: Dow Jones News Service, August 1, 2011
(From THE WALL STREET JOURNAL)
At a time when creating jobs is one of the nation’s top priorities, most tallies agree that the recent boom in gas drilling has put more people to work in Pennsylvania. But just how many new jobs the surge has generated in the state is open to debate.
Most of Pennsylvania’s natural gas is trapped inside the Marcellus Shale, an underground formation that also runs through parts of Ohio, West Virginia and New York. Finding and bringing this gas to the surface has become the state’s fastest-growing industry — and its most controversial one.
That’s because producing the gas requires hydraulic fracturing, or “fracking, ” a process in which water and chemicals are injected underground to fracture rock and release the gas. Environmentalists have opposed the practice, saying it risks contaminating groundwater and wells.
All sides agree that natural-gas development in the state has produced new jobs for laborers at well sites, truck drivers to haul equipment and waste water, and even engineers and accountants. But there is less agreement about how to count and just who to count when it comes to Marcellus-related job creation, so estimates vary widely.
Matt Pitzarella, a spokesman for gas producer Range Resources Corp., said a precise statewide count is tough because many of the new jobs are scattered across construction, trucking and other companies that serve the gas industry.
Range Resources, for example, has 300 mostly administrative and technical workers at its office south of Pittsburgh and relies on contractors for drilling. The state’s biggest driller and Marcellus Shale employer, Cheasapeake Energy Corp., of Oklahoma City, Okla., has a Pennsylvania work force of 1,400. Halliburton Co. has more than 1,000 workers in the state.
The Pennsylvania Department of Labor and Industry says industries related to natural-gas extraction directly and indirectly created just over 13,000 jobs in the state in 2010.
“It’s still a relatively small part of the state’s overall economy, but it’s still easily the sector that is growing the fastest,” says Christopher Manlove, a spokesman for the department.
Pennsylvania’s jobless rate for April was 7.5%, more than 1.5% below the national rate. Counties with 10 or more wells drilled in 2010 have seen their unemployment rates drop by more than half a percent on average during the past two years, while other counties remained the same or increased slightly, the department said.
Researchers at Pennsylvania State University, funded by an industry group, tallied 67,000 new jobs in 2010 based on spending by gas companies, including purchases of goods and services, royalties to landowners and taxes. That figure includes 23,000 jobs in construction, 13,600 in mining and 1,900 in hotel and food services from direct company spending.
Counting indirect expenditures by contractors and so-called “induced” economic impacts from gas-industry workers spending their wages, the report cites a ” total employment impact” of 140,000 jobs last year.
David Passmore, a professor of education at Penn State University who has studied labor-market trends in the state,but wasn’t involved in the report, said there are problems with linking industry expenditures to job creation. One is that it isn’t clear if Marcellus-related companies are buying all their supplies in Pennsylvania.
The Marcellus Shale is “a very positive thing for Pennsylvania’s economy, personal income and employment,” said Mr. Passmore. “But how big it’s going to get is really a question that a lot of people are really skeptical about.”
The Marcellus Shale Coalition, an industry group, uses “new hire” figures from the state, rather than new jobs, as its benchmark, and says there were 72,000 natural-gas-related new hires last year.
“Measuring hires is a really important indicator of growth. Measuring jobs is more important relative to other sectors of the economy,” Kathryn Klaber, head of the group said. “I think they both have their place.”
The Keystone Research Center in Harrisburg, which gets funding from foundations and labor unions, says the use of “new hires” is misleading because it includes people who fill vacated jobs, and not just newly created ones. “The impact has definitely been overstated,” said Stephen Herzenberg, an economist at the center. “At least so far, the Marcellus isn’t the answer to Pennsylvania’s job shortage.”
The Keystone center says a better measure of job creation is the employment figures in six core Marcellus industries tracked by the state labor department. There were 6,649 jobs created last year in those six industries, which include oil and natural-gas extraction and pipeline transportation.
The department’s measures of Marcellus-related new jobs also include jobs in 30 ancillary businesses, such as environmental consulting services. Those sectors added 6,428 jobs last year, pushing the state’s overall tally above 13, 000.