Faced with negative economic effects of fracking bans, activists panic

Bottom line, if economic impacts of shale development have been felt by the entire state, so too will fracking ban

By Nicole Jacobs, EnergyInDepth

After the United States Chamber of Commerce released the fourth installment of its Institute for 21^st Century Energy’s Energy Accountability Series (Energy 21), which looked at the economic effects of a national fracking ban and found it wouldn’t be pretty, activists flew into a panic.

The results showed devastating impacts across the country, with Pennsylvania being hit especially hard due to the significant impact the Marcellus Shale has had on the Commonwealth’s economy. Anti-fracking activists were quick to try and deflect the staggering figures in a StateImpact Pennsylvania article.

Stephen Herzenberg, the executive director of the anti-fracking thinktank, Keystone Research Center, told StateImpact,

“’This model is a case of garbage in, garbage out,’ he said. “The U.S. Chamber, the Pennsylvania Chamber, the Marcellus Shale Coalition, have a long history of generating ridiculous estimates about the actual or potential job impact of fracking. This is just one more in a long series of such estimates.”

Herzenberg said that some 90 percent of the Chamber’s projected job loss comes from the higher gas prices that would result from a fracking ban, but that the estimate is far too high. ‘On its face, these are laughable numbers,’ he said.”

This is the same activist who claimed last April that the studies predicting job growth in Ohio used “silly” methodology to come to figures of roughly 200,000 jobs. Herzenberg turned out to be wrong, of course. Not only did the unemployment rate decline by 66 percent by April 2015, but there were 190,153 people employed in Ohio’s oil and gas industry or related companies. So Herzenberg is once again downplaying the incredible positive impacts the oil and gas industry has had on shale states.

According to the Energy 21 report, if a national fracking ban were enacted, Pennsylvanians would be faced with,

• 466,000 jobs lost,
• a $45 billion hit to the state’s annual GDP,
• and an average increased cost to Pennsylvania households of $3,537

So where do those job numbers come from?

The report figure of 466,000 jobs lost includes both those directly related to shale development and others that would be impacted from rippling effects of a national ban like higher energy costs. Obviously, with a ban the immediate impact would be on those individuals working directly in the shale industry.

In Pennsylvania, the direct number of jobs created from Marcellus development was recently revised under the Wolf administration. Even if we assume that the administration’s calculation of 89,000 jobs related to shale development in Pennsylvania is correct (other estimates are around 200,000) that’s tens of thousands of jobs that are eliminated with a fracking ban. But it isn’t only the Marcellus industry directly that relies on natural gas being developed.

Pennsylvania has also been a part of a historic manufacturing renaissance in places that were previously in states of economic depression from plants and factories closing. That’s all changed thanks to an abundance of natural gas feedstock and new infrastructure projects. Plastics and fertilizers are being produced here at home, at more affordable rates for consumers like farmers. The steel industry is coming back to the Commonwealth, chemical plants are re-opening, and the spur of new pipeline projects are also having major impacts on manufacturing job creation. As President Obama said in November 2014:

“When I travel to Asia or I travel to Europe, their biggest envy is the American, homegrown, U.S. energy production that is producing jobs and attracting manufacturing because locating here means you’ve got lower energy costs.” [Emphasis added.]

But those thousands of jobs would go away without the industry and feedstock here that has made Pennsylvania so attractive for manufacturing investors in recent years.

Then there are the many new natural gas-fired power plants being built or converted in the Commonwealth. Not only would residents be faced with soaring electricity costs, as natural gas would have to be piped or shipped in from places like Canada or Russia, and if shipped also converted from a liquid upon arrival in America, but all of the jobs being created by these projects would disappear:

• According to Invenergy, Lackawanna Energy Center will create 600 jobs during construction of the facility and once completed the project will generate more than $50 million in community investment.
• The Panda Patriot will “create approximately 500 construction jobs; 27 direct jobs to operate the plant and 45 indirect jobs to support the plant,” and supply up to one million homes.
• The Panda Liberty is estimated to create the same number of jobs as the Patriot, and in supplying another million homes will generate “approximately $5.9 billion to the area’s economy during construction and the plant’s first ten years of operation.”
• The Moxie Freedom is estimated to create yet another 600 jobs that will produce roughly $120 million in payroll and other worker-related revenue.

There are also the retail, hospitality, restaurant and other industries that rely on Pennsylvanians having some level of disposable income to use their services. Jobs in those sectors would suffer as well.

While Herzenberg calls the figures that estimate job losses from higher energy costs as “laughable,” those impacted would hardly find the humor in such remarks. Take for instance the trucking industry—and not just the water or equipment trucks associated with shale development—but the milk and other farming trucks, the orange Schneider Valley Farm trucks that are a staple on roadways in Northeastern Pennsylvania and the trucking companies out of Lancaster County. Even the “garbage” trucks that keep our cities clean would be impacted. They’d all be facing tough times staying afloat, let alone fully staffed, given skyrocketing energy costs.

The average worker would be impacted as well, as a 2014 report from the Pennsylvania Data Center showed. With only nine percent of residents working from home, higher energy costs could limit employment opportunities and would lessen disposable income for most Pennsylvania workers that commute on average 20-30 minutes, with places around Philadelphiasometimes looking at an hour or more in drive time each way.

As a 2015 study from Dartmouth College that looked at the economic ripple effect of shale development, showed, the economic impacts of shale development are felt throughout the state. From the report:

“Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs.” (emphasis added)

StateImpact also interviewed Emily Wurth, Water Program Director at Food & Water Watch, who said that the state should be investing in renewable energy rather than fossil fuels like natural gas:

“There’s huge economic opportunity in rebuilding our economy around renewable energy and energy efficiency which creates jobs.”

But that’s not realistic. In fact, a significant number of jobs would be lost if the country converted to 100 percent renewable energy. In January 2016 Stanford Professor, Mark Jacobson released a “study” explaining how the country could transition to completely renewable energy. EID dove into the data provided on Jacobson’s website and found that despite claims from climate activists, there would be 3.8 million jobs destroyed from such a transition versus an estimated 2.6 million jobs created. The data was later deleted by Jacobson, but not before EID was able to create a chart detailing where that job loss would occur. Nearly all of the categories can be found in Pennsylvania.

Not only would a transition to 100 percent renewables be a job killer across the country, including in Pennsylvania, but a recent paper also shows that getting rid of fracking would actually hurt renewables. According to a Bureau of Economic Research August working paper, the renewable industry is dependent on natural gas as a backup to be a viable energy option. Because of this, fracking has actually helped renewable energy growth, according to the study:

“Our paper calls attention to the fact that renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”

The authors explained this further in a Washington Post article,

“When people assume that we can switch from fossil fuels to renewables they assume we can completely switch out of one path, to another path,” Verdolini told the Post, noting the study suggests otherwise.

“The problem of matching demand and supply is magnified in the case of renewables due to their variability vis-à-vis fossil-based generation and to the fact that times of peak production do not necessarily take place at times of high demand.”

Further, the reality is that renewables do not create manufacturing jobs – at least not those that rely on oil or natural gas feedstock to produce the more than 6000 products Americans use daily.

And that’s just jobs. There’d also be millions of dollars lost in tax revenue and impact fees, charitable giving from the industry would cease, and the state’s GDP, which has increased over 900 percent since the first Marcellus well, would be hit hard.

The bottom line is that if the economic impacts of shale development have been felt by the entire state, so too will the impacts of it being banned.

Originally posted at EnergyIndepth on Nov 7, 2016