A decade into the fracking boom, West Virginia, Pennsylvania and Ohio haven’t gained much, a study says

by James Bruggers, InsideClimate News February 11th, 2021

After fracking companies invested billions chasing the natural gas boom across West Virginia, Ohio and Pennsylvania, what do people living in the middle of the most prolific gas fields have to show for it, more than a decade later?

That’s the question the Ohio River Valley Institute, an independent think tank based in Johnstown, Pennsylvania, working to advance a more prosperous, sustainable and equitable Appalachia, asked in a report published on Wednesday.

Its answer: In short, not much.

To be sure, the report found that new horizontal drilling techniques involving hydraulic fracturing in the Marcellus and Utica shale formations, which helped reshape the nation’s oil and gas fortunes, produced a lot of economic growth. But it largely failed to bring the things that help people and local communities the most: jobs, personal income gains and population growth.

The natural gas industry hasn’t been an engine for economic prosperity, said Sean O’Leary, the institute’s senior researcher and principal author of the report, and “there is no basis on which we can see that it even can be, going into the future.”

It was unable to deliver on local prosperity even though gas production itself exceeded the most optimistic projections, he said.

The optimistic projections included a 2010 American Petroleum Institute report projecting robust job growth that was seized on by officials in Pennsylvania, Ohio and West Virginia to usher in the industry. But the institute found that jobs in the 22 counties that account for 90% of the production in the three states increased by only 1.7%, according to data from the U.S. Bureau of Economic Analysis, while nationally the number of jobs grew by 10%.

The fracking boom offered economic hope in the Upper Ohio River Valley after the collapse of the steel industry and amid the decline of coal mining, which was hastened by a glut of cheap gas.

An American Petroleum Institute spokeswoman, Bethany Aronhalt, called the report misleading and said that “there’s no question” that fracking has been a “game-changer” for local economies while “supporting hundreds of thousands of jobs across the country” and lowering energy costs. “While some groups may be focused on pushing their own agendas, our industry is focused on advancing solutions for a cleaner future, delivering affordable, reliable energy and powering the nation’s economic recovery,” she said in a written response. 

The Gas and Oil Association of WV, a West Virginia industry group, did not respond to emails and phone messages seeking comment.

An industry official in Ohio also disagreed with the institute’s findings and pointed to other economic numbers, including overall lower unemployment in key Ohio counties and an industry investment of $96 billion in Ohio alone since 2011, to make a case that the drilling and resource extraction has been beneficial. He also cited a state report that says Ohio has 200,000 oil and gas jobs.

“We think they misunderstood what is happening here,” said Mike Chadsey, spokesman for the Ohio Oil and Gas Association. “They are driving at a narrative that is anti-oil and gas and doesn’t take into account the lower unemployment numbers, the investment numbers, and the 200,000 oil and gas jobs in Ohio.”

O’Leary does not dispute that the oil and gas industry employs people in each state, but questions where they are located and how many of the jobs are new.

He said the institute’s report seeks to reveal true measures of economic prosperity in the counties most affected by the gas boom. In order to do that, the institute focused on counties that produce the most gas and where natural gas production is a more significant part of the local economy.

Those counties were Doddridge, Harrison, Marshall, Ohio, Ritchie, Tyler and Wetzel in West Virginia; Belmont, Carroll, Jefferson, Guernsey, Harrison, Monroe and Noble in Ohio; and Bradford, Greene, Lycoming, Sullivan, Susquehanna, Tioga, Washington and Wyoming in Pennsylvania.

In general, the report found an increase in economic growth as measured by their share of gross domestic product, but job growth and personal income lagged behind, as did population growth.

In Ohio, for example, the counties had a net job loss of 8.4% between 2008 and 2019 and experienced a 3% population loss. None of its gas counties were close to the national average for personal income growth, according to the findings, and only two, Guernsey and Harrison, exceeded the state average. As a group, they were a third below the national average and 40% below the state average. 

In Pennsylvania, job growth in the gas counties was less than half that of the nation but about the same as the state, the study found. While Pennsylvania’s overall population went up by 1.5%, its gas counties experienced a 1.4% decline. Personal income growth trailed the national average but was slightly better than the state average.

Only in West Virginia did the natural gas counties outperform the state for personal income and jobs, the institute found. But even then, the rate of personal income growth was less than half the national average and its population loss was greater than the state as a whole.

Doddridge County was the only one of the 22 natural gas counties in the study to outperform the nation on all three measures of economic prosperity — personal income, jobs and population. But the study found that with only about 8,000 residents, it was the second smallest in the study and carried relatively little weight in calculating the region’s overall performance.

The report did not factor in additional economic losses since last year because of the coronavirus pandemic.

The latest West Virginia Economic Outlook, from 2021 to 2025, published by the West Virginia Bureau of Business & Economic Research, reports that the pandemic had “upended” that state’s energy sector, and that gas drilling activity by the end of last year had “nearly come to a standstill.”

Employment in the oil and gas sector in West Virginia is expected to remain suppressed through 2022, then begin to regain ground, reaching 6,700 jobs.

In October, Mountain State Spotlight, with the ProPublica Local Reporting Network, reported that West Virginia Gov. Jim Justice had, a year earlier, promised business leaders that the state’s economy was on the verge of a boom, brought on by continued growth in natural gas production that would spark an industrial renaissance.

But in their report, the news organizations found little evidence of progress toward the future Justice had described, or “much proof that the governor’s promises weren’t more of the same economic fairy tales West Virginians have heard for generations.”

Inside Climate News last year also reported that a much-ballyhooed petrochemical buildout in the region was faltering, as the oil and gas industry was facing an economic crisis.

Chadsey, the Ohio oil and gas industry spokesman, said the gas boom has produced a new generation of wealth, with many families who were paid royalties creating community foundations.

O’Leary, on the other hand, said much of the investment that came into the region went to pay workers brought in from places like Texas for temporary construction or drilling jobs. He also said that a lot of the royalties paid to mineral rights owners may have gone to out of state businesses or families. 

“All of a sudden, [of] the amount of money you expected to see, probably less than a quarter and perhaps as little as 10%, gets injected into the local economy,” he said.

Full story HERE

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