Where’s the beef? Gas industry jobs & taxes paid just don’t measure up to claims

Response to a WHYY report, New Numbers Show PA Gas Production Will Lead Nation.

Ms. Phillips -.This series of Penn State Reports has used a false premise, that capital spending directly equates to jobs and taxes, to make highly exaggerated claims. The gas industry has a great need for capital but an extraordinarily low requirement for staffing, about 10% of that of a normal industry.

This from the May 2010 version describes their methodology: “During 2009, Marcellus gas producers spent a total of $4.5 billion to develop Marcellus shale gas resources. Using the IMPLAN modeling system, we  estimate that this spending generated $3.9 billion in value added, $389 million in state and local tax revenues, and more than 44,000 jobs”  (emphasis added).

Judged against results these estimates were far off.   According to Labor and Industry figures there are presently only 18,000 employees in the six core gas extraction industries in Pennsylvania.

Because of the structure of Pennsylvania tax code, the gas industry pays almost no local taxes and very little state taxes.  The Pennsylvania Budget and Policy Center found only 44.4 million in state taxes paid in 2009.

Since then, the industry has claimed 1.1 billion in taxes paid but reading the fine print shows this to be the total for five years, 2006 to 2010.  Even then, the Budget and Policy Center complained that the Revenue Department had erected a smoke screen for the industry by counting taxes their employees and others paid.

Not to be deterred or embarrassed by past failure, Considine and company press on to new ridiculous highs in this current version..

Our estimates suggest that in 2020 the Marcellus industry in Pennsylvania could be creating more than $20 billion in value added, generating $2 billion in state and local tax revenues, and supporting more than 250,000 jobs,” said the authors associated with Penn State’s department of energy and mineral engineering.”

To put the above “estimate” of jobs into perspective, consider this item.  A 2008 US Labor Department analysis of the oil and gas extraction industry found only 162,000 employees nationwide. A look at the three pages listing of industry job titles shows that the majority of these aren’t working on rigs but  are sitting at desks at corporate headquarters in the Southwest.

The Penn State Reports have the same relationship to the Marcellus industry as fantasy football has to the NFL.

Jon Bogle

Williamsport, PA 17701