Burgh Energy Report: More Natural Gas Geopolitics

Yesterday was a bit sparse on the globalization/international migration front. At least, I didn't find an article that inspired me to write. This morning, my cup runneth over:

The world faces a natural gas glut that will cool prices, says the International Energy Agency, raising the prospect that Russia’s grip over Europe’s energy security will loosen.

In a draft version of its World Energy Outlook (WEO), to be published next Tuesday, the rich countries’ energy watchdog says that “global gas markets have evolved from a seller’s market, driven by tight supply and demand, to a buyer’s market as demand weakens while new supply comes on stream”.

The oversupply of gas will be even greater if countries push ahead with plans to save energy and develop more renewable electricity and nuclear power.

In the report, the IEA expects overcapacity of gas pipelines and liquefied natural gas terminals to reach at least 250bn cubic metres by 2015, more than four times the spare capacity in 2007. For the US, the gas glut will force companies to scrap plans for new LNG import terminals and mean that much of its existing capacity will be underused.

“Projected global demand points to significant under utilisation of inter-regional pipeline and LNG capacity around the world. This looming glut could have far-reaching effects on gas pricing,” the draft states.

An IEA spokesman said the agency would not comment on the WEO ahead of its launch.

A supply glut on the scale projected by the IEA would be a sea-change for an industry braced for shortages last year and be a significant blow to Russia, Iran and Qatar, which control the biggest gas reserves.

Implications of the glut are discussed further here. I also recommend reading a post from yesterday at Knowledge Problem. There is great uncertainty about the future of natural gas. Check out this projection:

Environmental policies would have a serious effect on gas demand, reducing it 5 per cent by 2015 and 17 per cent by 2030 compared with the business-as-usual scenario, the IEA concludes. If demand were to fall, the US would become largely self-sufficient and Europe would rely less on Russian gas, long an area of anxiety among European Union officials. ...

... In the US, the situation is slightly different, says the IEA, mainly because of its large reserves of natural gas trapped in shale rocks. New technology that allows companies to break the rock and drill horizontally has opened up vast new areas of supply, helping to nearly eradicate the need for liquefied natural gas imports from abroad.

Natural gas appears to be the linchpin for American energy independence. Whatever the case, Pittsburgh is at the center of a very resource rich region (see Brookings release about money for cleaning up the Great Lakes). The city is strategically located between two major population corridors (Chi-Pitts and Bos-Wash). The proximity to those two globally prominent markets is a significant advantage. Leadership issues aside, I don't think anyone could over-sell the importance of the Marcellus Shale play.

Cheap energy is back.

Global Rust Belt Economic Forum

Tapping the talent of a domestic diaspora mimics established patterns of international migration. A great blog for exploring the possibilities is the Emigrant Advice Network, which focuses on the Irish Diaspora. Today, China is held up as a model of best practice:

With so many emerging efforts to engage the diasporas of various nations around the world, it’s good that Ireland has been upping its game in this respect. Our huge diaspora gives us a head start in engaging with our citizens abroad, and we have numerous local, regional and industry-based networks aimed at assisting the Irish at home and abroad in maximising their business efforts – but it’s clear that we are not alone in our ability to galvanise a global force of entrepreneurs and investors for our national economic benefit. And with the size of the global Chinese community estimated at between 30 and 120 million, a strong network will have a powerful impact.

Unlike the Global Irish Economic Forum, which was overly restricted in being limited to only 180 participants, this one is open to anyone willing to part with the $800 registration fee. Perhaps some of our global Irish entrepreneurs with Chinese and Asian links might be interested in attending – and with the Chinese and Irish diasporas being two of the world’s largest, joint networking could mean profound mutual benefits around the globe and at home.

Diaspora forums are a good idea. (Check out this piece of news about the upcoming Pravasi Bharatiya Divas in India) Much of the economic development potential of out-migration and increasing geographic mobility is there for the taking. It remains a policy frontier.

I propose holding a shrinking cities redevelopment conference in Youngstown. The theme is Rust Belt Refugees and how this talent pool can thrive in America's urban frontier. According to Aaron Renn, the urban frontier meme has captured the imagination of many people. Rust Belt expatriates would be the perfect pioneers to rebuild our cities.

Deglobalization

As I posted at Greater Youngstown 2.0, I'm dedicating November blogging to issues of international migration and globalization in anticipation of Richard Herman's book release party in early December. I feel inspired to write more about globalization, a subject about which I'm passionate. The world system is at a crossroads, like it was 20-years ago when the Berlin Wall fell, and there is no shortage of visions for the new order of things:

In tomorrow’s economy, distance will cost money. Globalization was the product of cheap energy. Deglobalization is the economic face of triple-digit oil prices. The whole notion of sourcing supply from halfway around the world to save on labor costs will no longer make any commercial sense. From making our own steel to building our own furniture to growing our own food, the soaring cost of oil-fired transport will bring production back home to the local markets it once served.

To some extent, I agree. But the dearest commodity will not be oil. It will be, already is, trust.

Globalization was the product of distance-trust. Homogeneous central business districts popped up in the darnedest places, a familiar landscape used to greet ambitious cosmopolites. Localization has little to do with steep increases in energy costs:

Now, supermarket chains are paying attention to Eataly, which Atlantic magazine called "The Supermarket of the Future." Coop Italia, a large Italian co-operative supermarket chain, took a minority stake in Eataly in a bet the concept has strong growth potential.

Eataly hopes to turn its niche into big business, building on consumer demands for high quality and more locally produced foods. Eataly Torino, for example, gets 90 per cent of its products from Italy, and about half from the Piemonte region around Torino.

Torino is a model of sustainable globalization, its brand popping up in cities such as Pittsburgh, Cleveland, and Detroit. The attraction of slow food isn't inexpensive prices thanks to low transportation overhead. The issue is the opacity of our global supply chain of food:

First in a list of four main risk factors was "increasing demand for animal protein," which is a way of saying that demand for meat, eggs, and dairy is a "primary factor" influencing emerging zoonotic diseases. This demand for animal products, the report continues, leads to "changes in farming practices." Lest we have any confusion about the "changes" that are relevant, poultry factory farms are singled out.

Similar conclusions were reached by the Council for Agricultural Science and Technology, which brought together industry experts and experts from the WHO, OIE and USDA. Their 2005 report argued that a major impact of factory farming is "the rapid selection and amplification of pathogens that arise from a virulent ancestor (frequently by subtle mutation), thus there is increasing risk for disease entrance and/or dissemination."

Breeding genetically uniform and sickness-prone birds in the overcrowded, stressful, feces-infested and artificially lit conditions of factory farms promotes the growth and mutation of pathogens. The "cost of increased efficiency," the report concludes, is increased global risk for diseases. Our choice is simple: cheap chicken or our health.

We don't want cheap, non-gasoline dependent chicken. We want chicken we can trust. That's the new paradigm of globalization, brought to you by Eataly. (Coming soon to a Torino near you.)

More Null Hypothesis

Voting with our feet:

In 1956, the economist Charles Tiebout provided the framework that best explains why people vote with their feet. The “consumer-voter,” as Tiebout called him, challenges government officials to “ascertain his wants for public goods and tax him accordingly.” Each jurisdiction offers its own package of public goods, along with a particular tax burden needed to pay for those goods. As a result, “the consumer-voter moves to that community whose local government best satisfies his set of preferences.” In selecting a jurisdiction, the mobile consumer-voter is, in effect, choosing a club to join based on the benefits that it offers and the dues that it charges. ...

... Unpacking the numbers is even more revealing—and, for California, disturbing. The biggest contrast between the two states shows up in “net internal migration,” the demographer’s term for the difference between the number of Americans who move into a state from another and the number who move out of it to another. Between April 1, 2000, and June 30, 2007, an average of 3,247 more Americans moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas saw a net gain, in an average week, of 1,544 people. Aside from Louisiana and Mississippi, which lost population to other states because of Hurricane Katrina, California is the only Sunbelt state that had negative net internal migration after 2000. All the other states that lost population to internal migration were Rust Belt basket cases, including New York, Illinois, New Jersey, Michigan, and Ohio.

As Tiebout might have guessed, this outmigration has to do with taxes. Besides Mississippi, every one of the 17 states with the lowest state and local tax levels had positive net internal migration from 2000 to 2007. Except for Wyoming, Maine, and Delaware, every one of the 17 highest-tax states had negative net internal migration over the same period. Conservative researchers’ technical explanation for this phenomenon is: “Well, duh.” Or, as Arthur Laffer and Stephen Moore wrote in the Wall Street Journal earlier this year: “People, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.”

A great example of why we should leave demography to the Wall Street Journal.

Burgh Energy Report

The trend in the regional energy economy appears to be consolidating the base of operations in Pittsburgh. I doubt the news surprises anyone, but the headquarters migration is worth tracking. The latest is Fortuna Energy transferring from the Southern Tier of New York. Some background:

In March 2003, Fortuna became active in the Trenton-Black River natural gas scene when Talisman, based in Calgary, Alberta, spent $310 million for drilling rights to 420,000 acres in Schuyler, Chemung and Steuben counties.

The following year, Fortuna more than doubled its land leases by paying $65 million to acquire the rights to an additional 475,000 acres in the Southern Tier, Ohio, West Virginia and northern Pennsylvania.

Given the Marcellus play, the links between Pittsburgh and Calgary are intensifying. Thus, keeping an eye on the scene in Alberta can help with future casting:

With natural gas prices expected to slowly climb next year, there is a glimmer of hope in the latest oil and gas well drilling forecast.

"It's still pretty marginal, with the active drilling rig count increasing by four per cent next year and most of the increase coming in the second half of 2010," Nancy Malone, manager of economic analysis for the Canadian Association of Oilwell Drilling Contractors (CAODC), said Wednesday.

This year, the industry was hammered as low gas prices forced a curtailment of drilling. The 209 rigs drilling a projected 8,278 wells in 2009 represent a fleet utilization rate of just 24 per cent. That rate is expected to climb to 27 per cent in 2010.

Keep in mind that relatively low natural gas prices benefit the Pittsburgh energy economy. Production costs are lower in the Marcellus Shale area. Pennsylvania is aiming to maintain that advantage:

The natural-gas industry's leaders and lobbyists beat back Rendell's proposal to tax gas as it is pulled to the surface from the rich black-rock reservoir known as the Marcellus Shale.

So, as drilling rigs are sprouting in the state's northern tier and southwestern corner, the gas those rigs are extracting still isn't taxed. That makes Pennsylvania unique among the 15 states that produce the most natural gas.

What's more, the industry persuaded Harrisburg to lease more public land to gas drillers - even as the state's budget for environmental protection was being sharply cut.

What happened to Rendell's gas-tax proposal?

He says the industry made good arguments for staving it off. He did not want to slow the "gold rush," as he called it, of jobs and commerce the drillers would bring.

Policymakers would be wise to help residents see the connection between natural gas jobs and clean energy jobs. The more talent in this economic sector clustering in Pittsburgh, the better. Still, all signs are pointing to a huge labor shortage in the near term.

Brain Drain Report: The Null Hypothesis

One of the academic advisers on my dissertation committee was vigilant against personal bias. He went (probably still does) so far as to recommend studying a place you hated. In geography, most scholars do research in a location they love, which might cause you to push your work towards expected results. A tool that can help a scholar guard against seeing what you want to see is the null hypothesis:

Retaining talent is an effective approach to regional workforce development.

Instead of debunking brain drain myths, I look for an underlying rationale for the concern and functioning brain drain plugs. For example, brain drain is costly:

About 35,000 kids leave New Jersey each year to go to college and take about $6 billion with them.

"When you factor in tuition, transportation and all other student spending, there is significant revenue leaving the state," said Paul Shelly of the New Jersey Association of State Colleges and Universities. "My calculations put it at $6 billion."

Shelly says the money isn’t going far, either. Most New Jersey students stay in the Mid-Atlantic or New England.

"New Jersey does much research as to where the students are going. I don’t think they want to admit our money is being exported just over to Lehigh Valley or down in Delaware."

Also, brain drain is very real:

A new research report from the Empire Center for New York State Policy does not beat around the bush. Titled “Empire State Exodus,” the report begins with a blunt statement: “The Empire State is being drained of an invaluable resource—people.” ...

... Those who leave the Rochester area go where you might expect: Nearly 72 percent migrated to southern states, and 15 percent headed west.

Actually, that's not where I would expect. I would predict that most out-migrants don't move far from home, as is the case in the New Jersey (see above). But the point of this exercise is to find information and analysis that challenge my assumptions, aiding my attempt to prove the null hypothesis.

You ready for the coup de grâce? Philadelphia has plugged its brain drain and serves as a model for other communities striving to keep college graduates in place:

In looking to plug the incessant drain that happens each spring when newly minted college graduates flee Rhode Island for bigger metropolises, this state might do well to take a lesson from Philadelphia, experts say. ...

... “Statistics say the more students you get engaged in internships as early as you can, the higher retention rate you’re going to have because they know the businesses and they get more comfortable with the work environment within that community,” said Richard Bendis, founding president and chief executive officer of Innovation America, a public private partnership that worked on the Philadelphia project.

By 2008, Campus Philly had placed thousands of bright students in work programs. Not coincidently, it also vaulted itself to the top of several lists of best cities in America for young grads.

Rhode Island officials say they hope the Providence region can follow Philadelphia’s lead, crafting a concrete solution to help address a decades-old problem.

“We’re looking to use Philly as a template for building on our strengths,” Daniel P. Egan, president of the Association of Independent Colleges and Universities of Rhode Island, said at a “knowledge retention symposium” held Friday at Brown University and sponsored by the Greater Providence Chamber of Commerce’s “Innovation Providence” program.

That would explain all the internship programs I see popping up around the country. Philadelphia has crafted the silver bullet (plug?) for brain drain. Thus, I've disproved the central hypothesis of this blog. My work here is done.

Brain Drain Dallas: The Hysteria Continues

Update: Interesting take of the Dallas Arts District in the latest issue of the Economist.

Dallas isn't cool enough to retain its young talent:

Rawlins, I love ya, I've even met ya, not that you'd know me from Adam. But I think your 'old man' view of how downtown should be is not fostering of a viable city center-- and because people like you make all the development decisions, people like me live in other, 'real' cities.

Just an anecdote: I am 26. Born and raised in Dallas. I know, forgive my modesty, everyone who graduated from every Dallas high school- public or private- within 3 years of me. Basically anyone who is a college grad and under 30 who grew up in the city, like I did. And I know most of the youngish movers and shakers who live in Dallas now. The 2 groups barely overlap. We have a huge brain drain problem in Dallas. It's not really talked about because it's not as easily quantifiable as the drop out rate or teen pregnancy. But it's a bigger problem, because it will manifest itself in 10 years and last for 30 years after that.

Did you know that not one person who represents Dallas in DC is from Dallas? Can you name the last mayor who is from our fair city? (hint: it's not Leppert, Miller, or Kirk)

I think this is huge reason for the lack of progress in continuity in the development of our city. If no one here remembers the mistakes how will we avoid them?

For the record I plan on returning and raising my family in the city, but unless I can convince them, few of my peers plan on doing the same. And you and I will be left to live next door to the hicks from east Texas and the guidos from south Jersey.

The above is a reaction to a blog post in the Dallas Morning News which serves up a Financial Times critique of the city's new Arts District. Actually, it is part of an exchange between two commenters well worth reading. The complaint is at the heart of many attempts to retain local graduates in shrinking cities. Make the downtown appealing to young adults and they won't leave. However, the point isn't whether or not Dallas scores highly on the cool factor with its Arts District.

By just about any metric, Dallas is a thriving city. It pulls in talent from all over the country. It is an attraction winner. There isn't a brain drain problem. That's because the exodus of natives doesn't matter. Using brain anxiety to sell an expensive gentrification program is no better than libertarian attempts to convince (invoking the same fear) the polity to cut taxes. Any guesses about the political leanings of those who offer the loudest critiques of the various Cool Cities initiatives? Two sides of the same coin.

Shrinking Cities Talent

Update: Searching my own archive revealed a couple other posts worth noting. First, I found the Federal Reserve Bank reports about brain drain. They came from the Minneapolis branch. Second, that sweep netted an interesting story about the brain drain in Minneapolis as worse than the one in Cleveland. In other words, more talented people left Minneapolis than Cleveland. Chew on that for a spell.

I've linked to a large number of reports in this blog and now I'm in danger of losing track of some very useful data. The following is not an exhaustive list. I've searched for the key documents that serve as the foundation for my suggested boomerang migration initiative.

The first step involved debunking the dominant brain drain narrative that is behind most plans for workforce development. There is a lot of useful analysis coming out of Michigan aimed at a better understanding of talent migration. Here is a blog post I wrote about geographic mobility of doctoral graduates. The link to the report is now broken, but a Growthology post has the 411. That's a good place to start if you want to track it down. Of note is the acute brain drain problem in Indiana. More brain drain numbers can be found here.

Over my three years of blogging, I've seen much more interest in talent migration. (Check out the latest American Community Survey publication.) A good example comes from the Massachusetts Technology Collaborative. I posted about their report, but that's another dead link. Using the information stashed there, I'm confident I could dig it up with a few Google search tricks.

I've got a polished piece over at New Geography that details Pittsburgh's unexpected brain gain. I've properly attributed my ideas to Chris Briem, who has labored to debunk the persistent brain drain myths plaguing SW PA. Check out his website for links to his work. Briem's analysis has provided me with the confidence to challenge the dominant policy narratives in play throughout the Rust Belt. I'm still seeking an active talent management initiative that makes sense. And before I forget, I link to a few important reports in the NG article that helped me to better understand Pittsburgh's prescient investment in human capital. The stuff from the Chicago Federal Reserve Bank is obvious enough, but more on the Brookings data here.

Finally, I can think of no clearer rebuke of brain drain hysteria than the report from Federal Reserve Bank of New York, Buffalo Branch. The problem is talent attraction, not talent retention. Whenever I read about another retention initiative, I roll my eyes largely as a result of the Fed's groundbreaking analysis. The Federal Reserve Bank system is a treasure trove of useful data. I still have to find the post that references the study, but I need to track down the FRB critique of brain drain policies as untested. A lot of money and effort is spent with no idea if it will work. Thus, I cry "boondoggle" or "red herring" when politicians make claims that they will plug the brain drain.

Pittsburgh Art and Tech Corridor

From Pittsburgh Art + Technology:

The Pittsburgh Technology Council is in currently creating a proposal to create an Art and Tech Corridor in the Cultural District during this year’s arts festival, and is looking for companies and individuals to participate – and showcase the innovation and creativity of our region.

I like this idea. It would help the Pittsburgh arts scene stand out globally and become a destination for people interested in the intersection of art and technology. I'd characterize the initiative as a clever talent attraction strategy that will add considerable vibrancy to the downtown.

Empire State Exodus: Taxes And Migration

The libertarians are at it again. The argument is that cutting taxes attracts people. The latest in a long line of policy experts making the same ridiculous claim is the Empire Center for New York State Policy:

What accounts for New York’s chronic inability to attract and retain more Americans than it loses every year? Any attempt to answer that question must begin with New York’s state and local tax burden, perennially ranked among the heaviest in the country. Taxes aside, likely explanations differ regionally. Downstate residents face high taxes and housing costs rated among the most “severely unaffordable” in the world. Land-use regulations in downstate New York also tend to inhibit growth. In upstate New York, housing is relatively inexpensive but even more heavily taxed, and new economic opportunities have been scarce.

Weather, on the other hand, seems less compelling as an explanation. After all, while the Sunbelt’s climate has long attracted northerners, cold winters haven’t stopped New Hampshire, Wisconsin and Minnesota from adding population while upstate New York has been shrinking.

This much is clear: with New York now facing the most serious fiscal and economic crisis in its modern history, government policies should be aimed at slowing down and ultimately reversing the state’s population drain.

That's the conclusion provided in the executive summary. Perhaps the actual report is a bit more compelling. But the overview plays fast and loose with the numbers. Net domestic migration isn't very useful for this kind of analysis. I know from experience that the IRS provides disaggregated data. Invoking the term "exodus" and then presenting net migration as evidence is the work of hucksters. The intent is to deceive, using the red herring of brain drain to achieve a certain policy end.

Most of the NY State media ate it up. One of the more thoughtful interrogations:

Still, despite all these trends, New York’s population rose 2.7 percent this decade, to 19.5 million people. The report says the top reason for that is a growing influx of foreign immigrants downstate.

Other researchers have reached different conclusions when studying migration patterns in New York.

The Federal Reserve Bank of New York, for instance, has found that while upstate has been experiencing a net loss of college-educated workers, it’s because of a low rate of people moving into New York—rather than an abnormally high rate of people leaving the state.

Out-migration rates are abnormally low, now more than in the recent past thanks to the Great Recession. That's hard to discern given slight of hand the Empire Center employs. Even the conclusion is confusing. Is cold weather Wisconsin growing population because of immigrants? Both Minnesota and Wisconsin are net migration losers. Shrinking states, in relocation terms.

The executive summary, designed for easy media consumption, is bullshit.

G-20 Hangover

I'm working on a more detailed post for this afternoon. For now, a quick hit about perceptions of Pittsburgh in the wake of the G-20 Summit. From Forbes, Industrial Pittsburgh:

While the strength of a metro's mass transit in some cases influenced its traffic fatality rank, the types of industry located there largely affected each city's workplace death rate. These tended to be lowest in areas like Seattle and San Jose that contain a profusion of technology and service jobs--or Detroit, where nearly one quarter of the workforce is unemployed. Dangerous jobs are more prevalent in industrial centers like Pittsburgh and Indianapolis, whose workplace death rates were five times higher than the safest, Minneapolis.

That's from an article listing America's safest cities. From the standpoint of workplace death rates, Postindustrial Pittsburgh appears to be an exaggeration. Coverage of the Steelers-Vikings tilt in the Toronto Star indicates that Canada got the makeover memo:

As the No. 1 sports city in North America, Pittsburgh is a great place to live and play but, obviously, a tough place for visiting teams to compete.

Latest to feel the cool welcome of Steeltown are the Minnesota Vikings, who had their 6-0 start derailed Sunday by a Steeler team forged from the same mettle that carried last season's version all the way to a Super Bowl victory.

That championship, combined with the Stanley Cup won by the Pittsburgh Penguins as well as strong performances from local college teams, made Pittsburgh the top choice out of 399 cities eligible for consideration by The Sporting News in its ranking of best sports cities for 2009.

For what it's worth, Toronto came in at No. 36, tops in Canada (Vancouver is No. 39, Calgary No. 42, Montreal No. 45, among others). That placing seems wildly generous considering the moribund state of the Maple Leafs, TFC, Argos, etc.

Some small glimmer of hope is being supplied lately by the Bills, which Toronto sort-of, kind-of shares with Buffalo. If the Bills are winning, we'll take a piece of that action, and Sunday Buffalo won its second game in a row, improving to 3-4 with a 20-9 win over the meow-mix Panthers at Carolina.

But there's nothing quite like being a Pittsburgher. Pass the mustard.

I don't have a point to make. I'm merely tracking the Pittsburgh brand post-G-20.

Burgh Energy Report: Pittsburgh People Renaissance

One of the more fascinating job descriptions I've ever seen is currently featured at Dewey & Kaye:

The Regional Opportunity Center (ROC) is seeking to attract, retain and elevate diverse workers in the Pittsburgh region. The ROC has implemented a PILOT program with regional energy sector companies including, but not limited to, EQT Corporation (EQT) Westinghouse Electric Company, LLC (Westinghouse) and Emerson Electric Co. (Emerson) with the goal of collaborating to attract, retain and elevate a significant number of diverse workers to the three particular companies. The organization is seeking an experienced professional to plan, direct, and coordinate the activities of the energy companies participating in the PILOT to ensure that the overall program objectives are met.

The Regional Opportunity Center, an independent 501c3 nonprofit entity was developed to address this gap in our region, and work closely with the corporate, government, nonprofit, education, labor and foundation communities to ensure success. The themes that define our work are Grow (our inclusivity), Attract, Retain and Elevate (a talented workforce), and Promote (the culture here in SW PA).

The vision of the Regional Opportunity Center is to have the Pittsburgh Region be recognized as one of the most livable regions for a talented workforce of all backgrounds, and among the leading regions in elevating, retaining and attracting a diverse workforce. The ROC’s mission is to spearhead the next Pittsburgh renaissance - a "People Renaissance" that:

1. Embraces inclusion;

2. Ensures our region's growth by elevating, retaining and attracting a diverse workforce; and

3. Promotes Pittsburgh - nationally and internationally - as a diverse, welcoming region of opportunities.

Obviously, that is a tall order. The person who lands this position will have to understand the geopolitics of talent and energy. But you won't find that listed among the skill requirements. In my opinion, that's a gross oversight. The region is embarking on a campaign like that of resource rich Alberta, which is the main reason I'm referencing the employment posting. The demand for skilled labor is enormous and I'd bet there is considerable panic about the looming shortage. I doubt that even the most preferred candidates will be up for the task.

For example, consider the emerging political conflict between Canada and United States over carbon emission targets:

According to an interview with Canada’s environment minister, Jim Prentice, published Friday in The Globe and Mail, Canada will be heading to Copenhagen looking for less aggressive emission targets than Europe or Japan because of its faster-growing population and energy-intensive industrial structure.

With climate-change bills working through Congress, environmentalists have pressed Secretary of State Hillary Clinton to block the construction of large cross-border pipelines meant to increase exports of crude from bitumen refining operations.

Canadian oil executives are concerned that new American fuel standards will work against bitumen crude, which requires vast amounts of natural gas to refine.

But Ms. Raisinghani said it is “premature to comment” about the impact of such policies on Canadian crude exports. “We will follow the progress of U.S. legislative and regulatory actions with interest.”

Mr. Prentice indicated last week that the Canadian government does not intend to reveal its negotiating position at Copenhagen before the American government does. He also told The Globe that hopes for a successful treaty in December seemed to be fading.

These geopolitical squabbles will be a major force in the kind of talent demand coming from energy companies. Global pressure against bitumen crude might soften the demand for natural gas and help keep prices low, keeping a lid on the Marcellus boom. But that isn't the biggest concern.

The two countries will end up in a clean tech race. Given the proximity, it isn't a stretch to see cross-border talent poaching. Alberta has aggressively courted frustrated H-1B visa holders tired of waiting for a US Green Card. I envision a trade war over human capital. That's bad news for Pittsburgh's Diversity in Energy Program Manager. The SW PA region isn't accustomed to attracting lots of migrants. This inflow infrastructure must be built from scratch. After all, we aren't that far removed from the days of Border Guard Bob, the prevailing mindset today.

Brain Drain Report: Talent and Churn

I'm back from Maui. Hawaii is the 50th state I've visited. I'm rested, but itching to write and the trip helped to validate a few ideas.

I'll jump back into blogging with a post from Eve Picker:

Pittsburgh is his entry point back into the country. He already has a timeline firmly implanted in his mind for the length of his stay here. Three years and then on to a better place.

My first reaction when he told me this was disappointment. But Chris Briem set me straight. He said “I bet places like Manhattan or Boston, or places one might think are ‘not second best’ are full of transitory people who will not stay.”. And of course, he’s right.

Chris Briem also set me straight. At least, reading his blog and other pieces he authored prompted me to rethink my concern about Pittsburgh brain drain. So, I'm almost certain I understand his frustration when another writer makes the same mistake I made:

Ugh. Brain drain. No, I won't waste any time repeating myself with the errors in that oft-repeated logic. Thus the worst thing the [article] says about us is mostly a misunderstanding.

A declining population doesn't mean brain drain is occurring. In fact, natural decline can result in brain gain. That's the case in Pittsburgh (and other Rust Belt cities) with the less educated dying off and a younger generation more keen on obtaining a college degree. A shrinking city isn't necessarily a dumber city. The talent dividend is still a possibility.

There are a host of myths about brain drain, almost all of them easily debunked. (Hat tip Donald Bonk) I'm already convinced that human capital retention strategies are at least a waste of resources or at worst a boondoggle serving only special interests. (See Grants for Grads in Ohio) Plugging the brain drain is bad policy based on a distortion of the facts.

States and cities are missing the boat. The latest issue of Entrepreneur is case and point. (Hat tip Jim Cossler, Youngstown Business Incubator) My spotlight is on Montana:

For many, moving west means facing the Montana Compromise: You can live in one of the most beautiful areas of the country, but you’ll have to write off any thoughts of a livable income. Bozeman and MSU are working to overcome that. The university, through its Center for Entrepreneurship for the New West, is tapping into the state’s independent streak: Montana has one of the largest shares of small businesses and self-employed people in the nation. Since it was founded in 2001, the facility’s students have provided 10,000 hours of consulting advice to 40 local companies, says center director Scott Bryant. The center’s efforts haven’t yet stemmed the brain drain--roughly half of MSU students still follow their careers out of state. But Bozeman is rapidly solidifying its place as the entrepreneurial hotbed of the Northern Rockies in hopes that its homespun entrepreneurs can live in Big Sky Country and still make the mortgage payment.

The article looks at the best synergies between university and town concerning the retention of entrepreneurial talent. The Montana State story is a good example of how this approach is all wrong. The MSU blurb itself admits as much (see emphasized passage).

Back to my Maui experience. My wife is in software sales and her efforts were rewarded with this trip. I was afforded the opportunity to rub elbows with other enterprise stars. I spoke with a couple residing in Denver. The husband is from Nebraska, the wife from Montana. They expressed a desire to boomerang back to her home state.

I would like to introduce the MSU entrepreneurial program to this Denver-based duo. Montana is a right to work state, which the expatriate noted as standing in the way of their relocation dreams. Here we have two well-educated people with tech employment experience dying to move to Montana.

Talented? Check.

Highly motivated? Check.

Confused about how to move where they most want live? Check.

Recommendation?

Rethink the "Montana Compromise" as an attraction problem. Trying to hold onto college graduates is, in a word, dumb. MBA programs strike me as the perfect vehicle to pull in the mid-career candidates described above. Teach them how to create the jobs that allow them to live wherever they want to live. There isn't an advanced degree in the entire universe with this focus. Little wonder why Chris Briem is so frustrated.

Burgh Energy Report: Natural Gas Buzz

I've got a bunch of good blog posts lined up, but I doubt I'll get to them all before heading to Maui on Sunday. I'll be incognito all next week, a real vacation. Today's news concerns unconventional natural gas. Read Chris Briem's post about drilling in the city. I'll add to the theme with this tidbit from the Tribune-Review:

Hart Energy Publishing LP is organizing the event where executives from leading operators in the Marcellus Shale regions of Western Pennsylvania and bordering states will discuss their drilling programs.

Originally, a few hundred people were expected. But registration has grown to more than 1,300 registrants, the VisitPittsburgh tourism agency said Thursday.

The unexpected interest in the conference demanded a change in venue. I'm curious as to why the hosts were unable to anticipate how many people would come. It's almost an order of magnitude bigger. Does the regional industry leadership understand how big this play is?

In other natural gas news, good article about European energy geopolitics in the New York Times. Also in the Times, a story about the problems with gas leakage, which emits the greenhouse gas methane into the atmosphere. Emphasizing the importance of how we manage this resource:

Unless monitoring is greatly expanded, they say, such emissions could soar as global production of natural gas increases over the next few decades.

The Energy Department projects that gas production could rise nearly 50 percent over the next 20 years as companies race to discover and tap new sources. In the United States, 4,000 miles of new pipeline was laid last year alone.

But the industry has been largely resistant to an aggressive cleanup.

Anyone still wonder why the unconventional natural gas convention needed a bigger space?

MoveSmart.org

Somewhat related to yesterday's question du jour, an organization that gets to the heart of a sticky problem:

Until now, information on neighborhoods has been buried in the back of academic reports, pinned to community center bulletin boards, and locked in data sets only available to planners, inaccessible to those who would benefit from it the most: housing seekers looking for a better neighborhood. MoveSmart.org will leverage the power of this information by combining these and other data sources into a single mapping engine built into a full-featured site that includes guides, tools, calculators, forums, and social networks, all designed to foster racial and economic integration.

Previous integration initiatives have proven costly and focused on families receiving public aid. Housing seekers with unlimited funds have always had the luxury of living where they choose. But for millions of families who have limited resources, finding the right neighborhood is difficult. MoveSmart.org will educate housing seekers about the benefits of integrative moves while at the same time providing suggestions on where to move, guides on how to move, and information on how to get involved in their new neighborhoods, inspiring pride in a new community and putting them on a path to true integration.

I emphasized the part that concerns unintentional immobility, the lack of locational choice resulting from a paucity of information and knowledge. This shortage was exploited to the hilt during the industrial era. The female workforce still suffers from a captive labor situation.

Access to information isn't the issue. Knowledge, not information, drives migration. A better predictor is trust. I can cite all the statistics and demonstrate keen knowledge of Pittsburgh neighborhoods. But you won't consider moving to Pittsburgh unless you trust my assessment. MoveSmart.org won't succeed in its efforts if it can't build up the requisite social capital. I think this where social media experts could be of great service.

A good example of such an approach is PittsburghToday, which recently announced a relaunch of its website. Behind the social media makeover are 3 Rivers Connect, deeplocal and Active Interface. I like the new look, but I have no idea how it will build up knowledge and trust. We're still feeling our way around these new forms of community. I suggest a study of diaspora and other social technologies that help trust overcome distance. There is a clear need for such research.

Question Of The Day

From PGH is a City:

Why are immigrants skipping over cities like Pittsburgh (1.3% Hispanic) and Cincinnati (1.3%) in favor of fellow rust belt cities like Rochester (12.8%) and Buffalo (7.5%) and Cleveland (7.3%)?

That's a great question for a geographer to answer.

Diaspora Networking Made Easy

Wednesday morning usually means clicking through the all the Pop City stories. Two items grabbed my attention. One concerns another I Heart Pittsburgh story, notable because I didn't catch it when first published. The link is to Intelligent Life, an Economist newspaper production. I've never heard of the quarterly. Is it new? Of interest is the focus on Braddock and the developing artist community there. Definitely not your typical Pittsburgh puff piece.

The second Pop City offering acting as my muse today is the subject of this post. Native is a new social network in Pittsburgh. The introduction to the initiative reminds me of something I'm working on for Youngstown:

Brian Supler is a native of the Pittsburgh region, but like so many people he ventured to other cities and countries before deciding to return here. After a decade spent living in New York City, he returned to the region last year seeking challenge and opportunity.

Katherine Harrel belongs to that other demographic you hear so much about in Pittsburgh these days: She wasn't born in Pittsburgh, but she's adopted it as her home. It feels instinctively right to her, and it's the place she's chosen to put down roots.

After working in the nonprofit and for-profit worlds in various cities, Supler and Harrel have joined forces to create a new organization – still in its infancy – that's meant to connect the best and brightest of today's Pittsburgh to one another. Both believe strongly in the importance of mentoring and effective networking, and they're committed to helping develop and keep creative minds here in Pittsburgh.

Supler as boomerang migrant reinforces a dynamic I've been studying over the last few months while shepherding a pilot diaspora networking project. Given the Pittsburgh job market, you likely have to want to live there in order to manage a move to the region. That's a good thing, believe it or not. Many people often move to boomtowns such as Portland or Austin without a job in hand. Returning to a Rust Belt city would take even a bigger leap of faith. The embrace of risk is an entrepreneurial attribute. Supler would be Exhibit A.

Katherine Harrel might be Exhibit B, but I'm not sure if that is true at this time. It depends on why she moved to Pittsburgh. My idea is to network boomerang migrants living in shrinking cities. The evolution of this approach started with the El Paso suggestion to target members of the diaspora who are job creators, self-starters. The problem is finding these dynamic people and then facilitating a move back, if the expatriate is even interested in leaving her current residence.

A bit of good fortune brought to my attention an article in the Wall Street Journal. I've already referenced the Scranton renaissance and how boomerang migrants (primarily from New York City) were finding each other in their hometown. Imagine an initiative such as Native exclusively for boomerang migrants. The upside to doing this is tapping the connections these people have in their expatriate city. This approach gets around a couple of problems, including the need for the occasional face-to-face meeting. Primarily, it solves the needle-in-the-haystack operation I'm currently overseeing.

Pittsburgh A Great Place To Start A Small Business

Update: I see in the Tribune-Review that the rankings are from Fortune magazine.

Or so says CNNMoney.com (via TECHburgher). Georgia Berner provides the inside scoop:

The seven-county area here has a lot going for it, and Pittsburgh is the star of western Pennsylvania. Everyone talks about Pittsburgh's universities, and of course they turn out well-educated students ready to go.

That's one side of the equation. The other is that there are lots of people here who know how to make things -- tradesmen and craftsmen. We too often overlook people who can make things. I need assemblers and equipment operators and welders, just as households need plumbers and carpenters. Pittsburgh has a wealth of those people. The cost of housing and services here is much less than elsewhere, so these workers can support a family quite nicely here.

That "build stuff" ethos could be a big asset given the latest reset of economic globalization. The push is for the United States to be more export-oriented. That assumes, of course, that the BRIC countries are ready to import more manufactured goods. That's the basic give and take of international trade, but there is also the prospect of the United State orienting its own market more towards domestic production.

Just as the world shifted away from the Rust Belt, it now returns.

Cheap Energy Geography

Cheap energy is back. Marketplace aired an incredible story Monday morning. The interviewee is the journalist of an article in the British newspaper Telegraph:

As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.

This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China.

Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.

Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants "ever" again.

Trying to unravel all the geopolitical implications of a world drowning in natural gas makes my head spin. What this will mean for Pittsburgh is staggering to contemplate. It is also good news for the Mahoning Valley where steel tubes used in the natural gas industry are produced. V&M Star is poised to invest $1 billion into its Youngstown plant.

The natural gas infrastructure, including industry innovation, could be manufactured primarily within the Tech Belt. An energy boom seems imminent with or without the right price point in the market. The driver will be the popularity of American energy independence. I'm confident in this geopolitical shift given the Russian posturing:

Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.

Needless to say, the Kremlin is irked. "There's a lot of myths about shale production," said Gazprom's Alexander Medvedev.

If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit.

We live in interesting times.

Midwestern Metro Stars

Over the weekend, I reacquainted myself with the doings of Richard Longworth. If you are unfamiliar with Longworth, I consider him to be a Midwestern expert on economic globalization. Recently, Site Selection magazine caught up with Longworth and asked him to name some Midwestern cities that are heading in the right direction:

"Des Moines is doing quite well. The Cedar Rapids-Iowa City corridor really was hurt by the floods. But they have a lot of smart people doing everything right. I have every confidence they'll come back. The Cedar Valley region around Waterloo is pushing the right buttons."

I picked the blurb about Iowa because it dovetails nicely with a story about migration to Iowa City:

Why do these trouble-makers come, Vernon asks. As has been widely noted there is something of a push caused by large-scale changes in public housing in Chicago; but there is a pull as well. Iowa City is attractive. My impression -- judging from the low-income black residents from Chicago whom I have met -- is that there are many factors involved.

Some have come trying to make a better life for themselves, but especially for their children, trying to get away from a climate of violence and from schools unable to cope with their students' problems.

Some came because of the uneven distribution of housing subsidies between Chicago and Iowa City. Until recently it had been common knowledge that the wait for those eligible for federally funded housing subsidies in Chicago was counted in years. In Iowa City, the wait was counted in weeks or months.

So some have come because Iowa City offered a better chance at decent housing for someone working for $8 or $9 an hour.

The Chicago-to-Iowa City pipeline is an interesting case of network migration. But I want to highlight the value proposition, which is the greater purchasing power in communities with some sort of strong connection to high-cost Chicago. That my segue to the latest from Wendell Cox at New Geography:

The east coast regions ranked among the top 10 metropolitan areas in nominal income also were decimated by their high costs, with only Washington (which rose from 3rd to 2nd) and Boston (which fell from 4th to 6th) remaining. New York fell from 5th to 21st, Hartford from 7th to 13th and Philadelphia from 10th to 16th.

The two non-coastal metropolitan areas in the nominal top 10 remain, with Denver rising from to 3rd and Minneapolis-St. Paul rising from 9th to 4th.

It can be argued that Middle-America replaced the five metropolitan areas dropping out of the top ten. Houston, long one of the most disparaged metropolitan areas among urbanists, occupies the 5th position (compared to its 11th ranking in the nominal list). Three of the new entrants are confirmed members of the Rust Belt: Pittsburgh (7th), St. Louis (8th) and Milwaukee (9th). Finally, there is a new east coast entrant, blue-collar Baltimore (10th). ...

... Outside the top 10 most affluent metropolitan areas, there are other surprises. Urban planning favorite Portland ranks 40th, just above Buffalo. Rust Belt Cleveland ranks 17th, a few positions above New York. Kansas City, with its highly decentralized civic architecture, ranks 12th, just behind Seattle. Indianapolis (17th) is more affluent than Chicago (18th) and both are more affluent than New York.

Cox adjusts metro per capita income for purchasing power, figuring out how much $1 is worth in different American cities. An $8 or $9 per hour job goes a lot further in Iowa City than it does in Chicago. Via Aaron Renn's twitter feed, read about being young and jobless in New York City. Better to be young and jobless in Pittsburgh, if you get my drift.

Again, declining or flat population numbers tend to dominate our perception of place. Making a go of it in Big City is irrational. I'd characterize it as a dumb geographic mobility strategy. The hope is akin to winning the lottery. Better to cut your teeth in a minor league town and then make the big move.

As the knowledge about the opportunity landscape begins to diffuse, I expect more people to carefully weigh cost and benefit. This should bode well for many Midwestern cities, particularly the ones that Longworth lists as coping well with the forces of globalization.