Pennsylvania needs strong regulatory and competitive tax frameworks that encourage capital investment and job creation — not a massive, misguided and unprecedented tax that would drive critical capital and jobs to other energy-producing states and countries. This would dramatically undercut efforts that are helping to lower energy costs for Pennsylvania consumers, increase energy security for Americans and bring cleaner fuels to our environment.
I recognize the rhetoric. It's the dreaded brain drain boondoggle. Ye who doth tax too much, shall be cursed with exodus. Undoubtedly, that will scare voters and politicians alike.
While I'm not impressed with the environmental arguments against shale gas drilling, the Marcellus Shale Coalition is dealing from a position of weakness. Via Null Space, the jobs evidence isn't compelling:
A [map] on the deli wall is dotted with colored push pins, showing all the different places where the gas men have come from, places like Texas and Arkansas. And although Lockhart is proud to show off the map, it illustrates one of the criticisms held by drilling opponents that many skilled jobs go to workers from out of state.
I'm already convinced that the most of the good jobs are going to workers from other states. Stories about booked hotels and motels abound. I know many people who work in the energy industry. Long spells away from home are normal. I've spoken with fellow airplane passengers travelling between Denver and Pittsburgh. The itinerant labor flow is obvious.
Yet the Marcellus Shale Coalition continues to spin. The website for Marcellus Shale jobs is a public relations disaster. Living in PA and looking for work? You are provided with a list of links to companies involved in shale gas drilling. If employment were Pennsylvania-based, then I can assure you that the Marcellus Shale Coalition would make that obvious on its jobs board. It doesn't and you can dismiss their campaign.
The threat is that all the jobs will go to West Virginia, or even to Russia. The latter is ridiculous. The geopolitics described would fail an undergraduate course in political geography:
Poland, China, Canada and other foreign nations are working aggressively to secure the capital needed to expand their energy production, too. There’s a reason officials at the Kremlin read news clips from the Marcellus region every morning — and it’s not because they’re looking for coupons.It’s no secret that our elected officials in Harrisburg are considering a new tax on shale gas production. Unfortunately, some don’t seem to understand that global competition for capital will react to the magnitude of the tax, evidenced by their consideration of a tax that would be the nation’s highest and least competitive.
Kudos for trying to make a sophisticated international political economic argument in a newspaper op-ed. Kathryn Klaber, you receive an "F" for execution. Natural gas companies are flailing. How will gas drilled Poland affect the market in New York City? How will gas drilled in West Virginia get to the market in New York City? Pennsylvania holds all the cards. Klaber is bluffing (poorly).
3 comments:
Sorry, Jim. You're the one who gets the 'F' for execution.
1) As you read, week after week, about new companies setting up HQs in SW PA, it should be clear that the Marcellus Shale job growth is real and significant (unless you think those HQ are filled with people who will be permanently commuting from Oklahoma.)
2) Even if it is true that many of the direct field jobs are going to out-0f-state residents, the follow on effects stay here: the money the workers spend while they're here, plus all the regionally based support services, direct and indirect, that support the industry.
3) Your comment about SW PA not competing for capital on a global scale is ridiculous, and is indicative of how you write from an academic perspective with little grasp of how business operates. No, roustabouts from Oklahoma are not going to Poland to drill gas. But the money needed to pay to do the drilling might. As one example, see 4/9/10 Wall Street Journal, about Reliance from India and Atlas Energy entering into a Marcellus Shale joint venture. Reliance paid $340M in cash plus an additional $1.4 billion in capital costs for development of 120,000 acres in SW PA. That's $1.4 billion that's not going elsewhere in the world to develop their energy assets. Don't like that example? Fine. Find some contra evidence of your own instead of making unsubstantiated assertions.
Is the Marcellus Shale asset so valuable that it can sustain a higher tax than the industry wants and still represent an attractive investment? My guess is probably. But it's definitely a gamble.
To assert the tax and regulatory scheme have virtually no effect on investment, jobs, and development of the Marcellus Shale, well that's failing miserably.
@Anonymous 7:14,
Of course I recognize that the job growth is real. I also have noted in my own blog the local benefits from all the drilling. I didn't address the investment geography, in this particular post.
I'm happy to take on that issue. Industry has already sunk considerable investment into the region. Your contention that this money can just pick up and go to Poland because the tax is too high is the definition of an "unsubstantiated assertion". Give an example of how a tax pushed dollars to another country. Then consider how shale gas plays might be different than other extraction.
Are the companies setting up headquarters going to pick up and leave because of the tax? I doubt it. Companies have already taken a lot of risk given all the policy unknowns. The bluster about the tax is an attempt to protect that investment. The argument that all this money is going to pick up and leave for Poland is ridiculous. There are policy hurdles everywhere. We haven't even touched upon the logistics of getting the gas to market.
Overall, you make an argument that the Marcellus Shale Coalition fails to make. Instead, that organization tries to contend that jobs aren't going to out-of-state labor. Kathryn Klaber's attempt at energy geopolitics is ham-handed. She's fear-mongering. The public relations campaign she is running is a disaster. How she holds onto her job is anyone's guess.
I can speak of my tale, 6 months attempting to gain employment with the energy companies. They'll take your resume, or open the job online, but without experience, I'm told, it's all but a closed door. The only entry anywhere near these companies is to work for a subcontractor as a truck driver hauling water.
The industry has done a POOR job partnering with schools seeking to train for 'all these jobs'. Since there's little else for Tri-State citizens (other than mineral right holders & extractors), join the majority of other states & pass the severance tax.
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