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boom and bust

Fracking boom brings job and income loss to Appalachian communities

By Elizabeth Perry - Work and Climate Change Report, February 23, 2021

A February study examined the economic changes in 22 counties the authors call “Frackalachia” – home to the Utica and Marcellus shale gas industry. The report, Appalachia’s Natural Gas Counties: Contributing more to the U.S. economy and Getting less in return examines the period from 2008 to 2019, a time when the area went from producing a negligible portion of U.S. natural gas to producing 40%. The report summarizes the job forecasts provided by oil and gas industry economic impact studies, (over 450,000 new jobs for Ohio, Pennsylvania, and West Virginia), and shows the actual economic data from the U.S. Bureau of Economic Analysis – a 1.6% increase in jobs – at a time when the number of jobs across the U.S. grew by 9.9%. Detailed statistics demonstrate the differences amongst counties and states – with Ohio faring the worst and Pennsylvania faring the best. The report’s analysis shows that in the entire area represented by the 22 counties, the share of the national personal income fell by 6.3 percent, the share of jobs fell by 7.5 percent, and the share of the national population fell by 9.7 percent , while 90% of the wealth generated from fracking left the local communities.

The report was produced and published on February 10 by the Ohio River Valley Institute, a non-profit think tank based in Pennsylvania, founded in 2020 with the vision of “moving beyond an extractive economy toward shared prosperity, lasting job growth, clean energy, and civic engagement.” This report has been widely reported, including in “Appalachia’s fracking boom has done little for local economies: Study”(Environmental Health News , Feb. 12), which summarizes the report and adds context concerning the health effects of fracking, and the failed attempts to expand production to petrochemicals and plastics using ethane, a by-product of the fracked natural gas.

Appalachia's Natural Gas Counties: Contributing more to the U.S. economy and getting less in return

By Sean O'Leary - Ohio River Valley Institute, February 12, 2021

Economists debate whether there is such a thing as a “resource curse”.

Between 2008 and 2019, twenty-two old industrial and rural counties in Ohio, Pennsylvania, and West Virginia, which make up the Appalachian natural gas region, increased their contribution to US gross domestic product (GDP) by more than one-third. In 2008, the 22 counties were responsible for $2.46 of every $1,000 of national output. By 2019, the figure had climbed to $3.33. Their rate of GDP growth more than tripled that of the nation. However, during the same period, measures of local economic prosperity—the economic impacts of that growth—not only failed to keep pace with the increased share of output, they actually declined.

  • The 22 counties’ share of the nation’s personal income fell by 6.3%, from $2.62 for every $1,000 to just $2.46.
  • Their share of jobs fell by 7.6%, from 2.62 in every 1,000 to 2.46.
  • Their share of the nation’s population fell by 10.9%, from 3.26 for every 1,000 Americans to 2.9 for every thousand.

It is a case of economic growth without prosperity, the defining characteristic of the resource curse.

Most of the GDP increase in this group of counties was due to the Appalachian natural gas production boom, which was facilitated by the advent of a drilling technique called hydraulic fracturing, or “fracking” for short.

Read the text (PDF).

A Decade Into the Fracking Boom, Pennsylvania, Ohio and West Virginia Haven’t Gained Much, a Study Says

By James Bruggers - Inside Climate News, February 11, 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 percent of the production in the three states increased by only 1.7 percent, according to data from the U.S. Bureau of Economic Analysis, while nationally the number of jobs grew by 10 percent.

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.

Appalachian Fracking Boom Was a Jobs Bust, Finds New Report

By Nick Cunningham - DeSmog, February 11, 2021

The decade-long fracking boom in Appalachia has not led to significant job growth, and despite the region’s extraordinary levels of natural gas production, the industry’s promise of prosperity has “turned into almost nothing,” according to a new report. 

The fracking boom has received broad support from politicians across the aisle in Appalachia due to dreams of enormous job creation, but a report released on February 10 from Pennsylvania-based economic and sustainability think tank, the Ohio River Valley Institute (ORVI), sheds new light on the reality of this hype.

The report looked at how 22 counties across West Virginia, Pennsylvania, and Ohio — accounting for 90 percent of the region’s natural gas production — fared during the fracking boom. It found that counties that saw the most drilling ended up with weaker job growth and declining populations compared to other parts of Appalachia and the nation as a whole.

Shale gas production from Appalachia exploded from minimal levels a little over a decade ago, to more than 32 billion cubic feet per day (Bcf/d) in 2019, or roughly 40 percent of the nation’s total output. During this time, between 2008 and 2019, GDP across these 22 counties grew three times faster than that of the nation as a whole. However, based on a variety of metrics for actual economic prosperity — such as job growth, population growth, and the region’s share of national income — the region fell further behind than the rest of the country. 

Between 2008 and 2019, the number of jobs across the U.S. expanded by 10 percent, according to the ORVI report, but in Ohio, Pennsylvania, and West Virginia, job growth only grew by 4 percent. More glaringly, the 22 gas-producing counties in those three states — ground-zero for the drilling boom — only experienced 1.7 percent job growth.

“What’s really disturbing is that these disappointing results came about at a time when the region’s natural gas industry was operating at full capacity. So it’s hard to imagine a scenario in which the results would be better,” said Sean O’Leary, the report’s author.

The report cited Belmont County, Ohio, as a particularly shocking case. Belmont County has received more than a third of all natural gas investment in the state, and accounts for more than a third of the state’s gas production. The industry also accounts for about 60 percent of the county’s economy. Because of the boom, the county’s GDP grew five times faster than the national rate. And yet, the county saw a 7 percent decline in jobs and a 2 percent decline in population over the past decade.

“This report documents that many Marcellus and Utica region fracking gas counties typically have lost both population and jobs from 2008 to 2019,” said John Hanger, former Pennsylvania secretary of Environmental Protection, commenting on the report. “This report explodes in a fireball of numbers the claims that the gas industry would bring prosperity to Pennsylvania, Ohio, or West Virginia. These are stubborn facts that indicate gas drilling has done the opposite in most of the top drilling counties.”

A Boom Without Job Growth

This lack of job growth was not what the industry promised. A 2010 study from the American Petroleum Institute predicted that Pennsylvania would see more than 211,000 jobs created by 2020 due to the fracking boom, while West Virginia would see an additional 43,000 jobs. Studies like these were widely cited by politicians as proof that the fracking boom was an economic imperative and must be supported.

But the Ohio River Valley Institute report reveals the disconnect between a drilling boom and rising GDP on the one hand, and worse local employment outcomes on the other. There are likely many reasons for this disconnect related to the long list of negative externalities associated with fracking: The boom-and-bust nature of extractive industries creates risks for other business sectors, such as extreme economic volatility, deterring new businesses or expansions of existing ones; meanwhile air, water, and noise pollution negatively impact the health and environment of residents living nearby.

“There can be no mistake that the closer people live to shale gas development, the higher their risk for poor health outcomes,” Alison Steele, Executive Director of the Southwest Pennsylvania Environmental Health Project, told DeSmog. “More than two dozen peer-reviewed epidemiological studies show a correlation between living near shale gas development and a host of health issues, such as worsening asthmas, heart failure hospitalizations, premature births, and babies born with low birth weights and birth defects.”

Moreover, oil and gas drilling is capital-intensive, not job-intensive. As the example of Belmont County shows, only about 12 percent of income generated by the gas industry can be attributable to wages and employment, while in other sectors, on average, more than half of income goes to workers.

In other words, it costs a lot of money to drill, but it doesn’t employ a lot of people, and much of the income is siphoned off to shareholders. To top it off, equipment and people are imported from outside the region — many of the jobs created went to workers brought in from places such as Texas and Oklahoma.

Despite the huge increase in shale gas production over the past decade, the vast majority of the 22 counties experiencing the drilling boom also experienced “economic stagnation or outright decline and depopulation,” the report said.

The American Petroleum Institute did not respond to a request for comment.

“[W]e could see long ago that the job numbers published and pushed out by the industry years ago were based in bluster, not our economic realities,” Veronica Coptis, Executive Director of Coalfield Justice, a non-profit based in southwest Pennsylvania, told DeSmog, commenting on the report. “At industry’s behest and encouragement, Pennsylvania promoted shale gas development aggressively in rural areas for more than a decade. And yet, the southwestern counties at the epicenter of fracking do not show any obvious improvement in well-being.”

Bailed Out and Propped Up: US Fossil Fuel Pandemic Bailouts Climb Towards $15 Billion

By Dan L. Wagner, Christopher Kuveke, Alan Zibel, and Lukas Ross - Bailout Watch, Public Service, Friends of the Earth, November 2022

The fossil fuel industry received between $10.4 billion and $15.2 billion in direct economic relief from federal efforts under President Donald Trump.

During a year of massive economic losses caused by climate change-driven wildfires and hurricanes, the U.S. government has sent billions in pandemic-related economic aid to the fossil fuel companies most responsible for catastrophic climate damage.

An analysis by BailoutWatch, Public Citizen, and Friends of the Earth reveals the fossil fuel industry received between $10.4 billion and $15.2 billion in direct economic relief from federal efforts under President Donald Trump to sustain the economy through the pandemic.

These direct benefits were magnified by indirect lifelines, most notably the implied seal of approval conferred on some companies’ debt when the Federal Reserve bought $432 million in oil and gas bonds from private investors on the secondary market. The Fed earlier signaled its support for the broader bond market, including junk-rated debt, by buying Exchange-Traded Funds that included $735.4 million of fossil fuel bonds.

By demonstrating its willingness to take on fossil fuel debt — and risky debt from any part of the economy — the Fed drew private investors back into a shaky market. This fueled a lending boom of more than $93 billion in new bond issuances by oil and gas companies since the Fed intervened in March — the fastest rate of energy bond issuance since at least 2010.

The Fed’s bond purchases, along with the new issuances they spurred, amounted to indirect benefits totaling $94.7 billion. Together with direct benefits worth up to $15.2 billion, likely more, the 2020 fossil fuel bailouts add up to $110 billion.

Read the text (PDF).

Straight Talk on the Future of Jobs in Pennsylvania

By staff - FracTracker and Breathe Project, September 2020

Straight Talk on the Future of Jobs in Pennsylvania (September 2020):

The Breathe Project and FracTracker Alliance have crafted the following messaging for refuting the conflated job numbers being touted by pro-fossil fuel organizations and political candidates regarding fracking and jobs in Pennsylvania that, in some cases, has inflated natural gas jobs in the state by 3500 percent.

Read the text (PDF).

The justice and equity implications of the clean energy transition

By Sanya Carley and David Konisky - Nature Energy, August 2020

The transition to lower-carbon sources of energy will inevitably produce and, in many cases, perpetuate pre-existing sets of winners and losers. The winners are those that will benefit from cleaner sources of energy, reduced emissions from the removal of fossil fuels, and the employment and innovation opportunities that accompany this transition. The losers are those that will bear the burdens, or lack access to the opportunities. Here we review the current state of understanding—based on a rapidly growing body of academic and policy literature—about the potential adverse consequences of the energy transition for specific communities and socio-economic groups on the frontlines of the transition. We review evidence about just transition policies and programmes, primarily from cases in the Global North, and draw conclusions about what insights are still needed to understand the justice and equity dimensions of the transition, and to ensure that no one is left behind.

Read the text (PDF).

Tackling the Farm Crisis and the Climate Crisis

By Darrin Qualman - National Farmers Union, November 2019

The farm crisis is real, as is the climate crisis. Left unchecked, the climate crisis will dramatically deepen the income crisis on Canada’s farms as farmers struggle to deal with continued warming, more intense storms, and increasingly unpredictable weather. It is clear that climate change represents a major challenge to agriculture, but it also represents an opportunity.

Farmers and policymakers are encouraged to recognize that we are facing an existential crisis, which means that all of our options must be on the table for consideration, even if they are uncomfortable to consider. If we commit to an open and honest conversation about the causes and effects of climate change and how they are intertwined with our agricultural sector, we also take the first steps towards a transition that will benefit us all.

Tackling the Farm Crisis and the Climate Crisis does not claim to have all the answers. Both the climate crisis and the farm crisis are so complex that no single report can provide all the answers. However, this report does have many answers — some of which could be implemented right away. Others provide a starting point to opening up the climate conversation in the agricultural sector. Options that will work for different geographic locations, soil types, or types of farms will be explored, but there is no one-size-fits-all solution.

Read the text (link).

International Oil Companies: The Death of the Old Business Model

By Paul Stevens - Energy, Environment and Resources, May 5, 2016

The future of the major international oil companies (IOCs) – BP, Chevron, ExxonMobil, Shell and Total – is in doubt. The business model that sustained them during the 20th century is no longer fit for purpose. As a result, they are faced with the choice of managing a gentle decline by downsizing or risking a rapid collapse by trying to carry on business as usual.

Most commentary on the IOCs’ problems has focused on the recent fall in oil prices and the growing global commitment to tackle climate change. Important though these are, the source of their predicament is not confined to such recent developments over which they have no control. Their problems are more numerous, run deeper and go back further. The prognosis for the IOCs was already grim before governments became serious about climate change and the oil price collapsed.

Read the report (Link).

Stranded Assets and Thermal Coal in Japan: An analysis of environment-related risk exposure

By Ben Caldecott, Gerard Dericks, Daniel J. Tulloch, Lucas Kruitwagen, and Irem Kok - Oxford, May 2016

Deploying a ‘bottom up’ asset-level methodology, we analysed the exposure of all of Japan’s current and planned coal-fired power stations to environment-related risk. Planned coal capacity greatly exceeds that required for replacement - by 191%. This may result in overcapacity and combined with competition from other forms of generation capacity with lower marginal costs (e.g. nuclear and renewables), lead to significant asset stranding of coal generation assets. Stranded coal assets in Japan would affect utility returns for investors; impair the ability of utilities to service outstanding debt obligations; and create stranded assets that have to be absorbed by taxpayers and ratepayers.

Read the report (PDF).

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