Natural Gas: A Tale of Two States

The states of New York and Pennsylvania have clearly divergent approaches to energy policy. New York is a long-time producing state which shares with its neighbor Pennsylvania the Marcellus Shale as an exciting resource with seemingly unlimited potential. Drilling has encountered roadblocks in New York, while next door, Pennsylvania is enjoying a boom of investment, good paying jobs, and mineral income for its citizens.

On a national level, the Obama Administration and the Democratic Congress seem more in the New York state of mind.

In an on-line article entitled It Was the Best of Times, It Was the Worst of Times, the website compares and contrasts the comparative economies and population trends in NY vs. PA.

The graph depicts the number of rigs actively drilling wells in each state in 2008 & 2009. Over that span, the NY rig count has fallen from about seven to two, while the PA count has more than tripled, from 20 to 63 active rigs.

In upstate New York…

Buffalo, Binghamton, Elmira lead in population loss: “Many upstate counties had population declines. … In some upstate regions, the population drop off was pronounced. The Buffalo-Niagara Falls region had the biggest population decline, with 46,305 fewer residents, a 4 percent decline. The Binghamton region’s population fell 3 percent, or from 252,323 to 244,694, a loss of 7,629 people.” (Elmira Star Gazette, 3/23/10)

Census: Population declines in upstate: “New Census estimates show … a continuing exodus from some upstate areas. … The story was different for many upstate areas, which have been suffering population losses for decades. The Census reports losses in rural counties like Hamilton County, which lost 8.4 percent of its population.” (Associated Press, 3/23/10)

…while, just across the border, Pennsylvania is actively pursuing Marcellus shale development:

Will natural gas fuel census increases? “By this time next year, Bradford County could see that its population has increased from the local gas industry boom in the results of the 2010 U.S. Census.” (Morning Times, 3/16/10)

Gas companies eager to tap Marcellus Shale: “This rush to develop the Marcellus region … could lead to … a boom in blue-collar jobs, the experts said.” (Pittsburgh Tribune-Review, 3/17/10

Marcellus Shale sends short-line railroad booming: “The full economic effect of the natural-gas boom is only beginning to be understood, said Timothy W. Kelsey, a Pennsylvania State University economist. … The oil and gas business was a $7 billion industry in Pennsylvania before the Marcellus frenzy. … “It could be a very big number.” (Philadelphia Inquirer, 3/21/10)

“Natural gas drilling in the Marcellus Shale could provide an economic shot in the arm for this region and Pennsylvania as a whole. … Natural gas has potential as an energy source and a jobs-provider, no doubt about it.” (Washington Observer-Reporter Editorial, 3/2/10)

All this economic activity can be traced, directly or indirectly, to the natural gas activity. Each active drilling rig directly employs dozens of rig workers and service personnel. Successful development means more construction activity. There will be new pipeline projects to get the gas from the producing fields to the residential and industrial markets where it will be consumed. Royalty checks and right-of-way payments will flow into the hands of landowners. And all this economic activity creates many more indirect jobs for teachers, retail employees, and so on.

(Energy in Depth is an education initiative of the IPAA, the Independent Petroleum Association of America, of which I am a member.)

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