Friday, April 08, 2011

Energy Industry And Regional Job Creation

On one hand, the strength of the energy industry is a good predictor of regional economic health. That's what the Marcellus Shale Advisory Commission is selling. An economist in Chicago is buying:

Which brings me to my broader point: there are plenty of similar success stories. Look no further than Pittsburgh, once the poster child for rust-belt decay and population flight. The city evolved into an educational, medical and technology hub and is now attracting energy companies seeking to extract natural gas from the Marcellus Shale that underlies a vast four-state region. Energy is also the story in Oklahoma City, largely stagnant for two decades following the energy bust of the mid-1980s.

The "broader point" is reinvention for a few metros. Energy is the centerpiece of the OKC economy. For Pittsburgh, the picture is more complicated. Just how much is unconventional gas responsible for the recent run of great job growth news?

On the other hand, an energy-centric economy isn't all it is cracked up to be. The wealth generated doesn't necessarily translate into more employment opportunities for locals. Furthermore, industry has a poor track record of painting too rosy a picture of growth in order to gain access to the goods.

Take the following with a healthy dose of skepticism. There is likely a partisan agenda in play. However, I'd bet that the criticism leveled is more common than energy industry boosters would admit:

"Our study demonstrated that new coal-powered plants simply don't deliver on their promise of new jobs for host communities, in fact, they don't even come close," said David Eichenthal, President and CEO of The Ochs Center. "The fact that only one of the large plants built in the past five years appears to have provided the number of jobs it promised shows that communities being asked to take on the burden of hosting new coal plants need to take promises of new jobs with more than a grain of salt." The report, which reviewed figures publicly promised by companies constructing coal plants and compared them to actual construction job creation in the county, is the first effort to measure one of the most important figures that communities rely on when deciding whether to approve new plants.

That someone would inflate job numbers to win the deal shouldn't surprise anyone. I'd equate the above alarm about the promises made in the debate about a shale gas severance tax in Pennsylvania. I keep reading how the policy will kill the goose laying the golden egg. How the murder will result from the tax is left to the imagination. Or, worse, the Marcellus Shale Coalition offers up some crazy scenario that doesn't make a lick of sense. It is nothing more than a scare tactic.

That's the problem with hydrofracking. The industry simply isn't credible. It denies the obvious, such as the steady stream of workers flying in from Texas, Oklahoma, and Colorado. As if we wouldn't notice all the "no vacancy" signs in Williamsport. Yet there appears to be a dividend. Is it connected to the lack of tax? I doubt it.

1 comment:

Paul Wittibschlager said...

Enjoyed the post.
When's the last time an energy company came to town in search of mineral rights - and did not make a huge impact on the environment? The jobs associated with it will come and go. We will be left with a worse environment.
Lets build our economy around sustainable practices, land conservation, cleaning the water and air. Pittsburgh is leading the way here also. This will lead to long term growth and an even better place to live.