Drilling in Appalachia

Drilling in Appalachia

The Ohio River Valley Institute recently released a report purporting to analyze the economic impact of the oil and gas drilling years on the local communities. Interestingly, the report suggests that while oil and gas drilling may have had a generally positive economic impact on the nation as a whole the local communities where the drilling has occurred have lagged behind national economic statistics in several important categories. The report looks at 22 counties in Ohio, Pennsylvania and West Virginia where oil and gas drilling operations have been prevalent.

The report acknowledges that those 22 counties’ share of the national gross domestic product has increased, but that the local communities themselves have seen decreases in their share of the national personal income, their share of the national job market and their populations. The authors of the report suggest this demonstrates economic growth on the large scale, but a lack of local prosperity for the communities that deal with the operations. Reports from several years ago suggested oil and gas drilling operations would create as many as 44,000 new jobs in West Virginia, 210,000 in Pennsylvania and about 200,000 in Ohio. While jobs have increased, they have not increased at the rate and number the industry suggested as they have sought tax breaks and favorable legal and regulatory rules. The report analyzes these numbers from 2008 to 2019, so any recent Covid-19 related downturns are not included in these statistics. When looking at income, jobs and population of markers of economic prosperity, the report suggests the reality of drilling operations has been local stagnation and/or decline.

As with any industry related report, industry interest groups have begun to fight back. The Marcellus Shale Coalition, among other interest groups, has already attacked the report as misleading and incorrect in its scope and conclusions. The caution has been political agendas are behind the findings and that statistics have been skewed and misapplied to reach their desired agenda.

What is the truth? As with most things, the truth is somewhere in the middle. The gas industry has no doubt brought money into the hands of many landowners and has resulted in both temporary and permanent jobs. The history of the coal extraction industry in West Virginia has demonstrated, however, that much of the generational wealth and prosperity associated with the extraction industries ultimately resides in out-of-state corporations and stockholders. Local landowners have made money and, hopefully, many have been reasonable in their investments and spending to make differences for their families. I think we should remain cautious when the oil and gas industry lobbies our government and politicians for legal and regulatory protections.  The growth these industries create does not always equal economic benefits for our local communities.

 


The Ohio River Valley Institute recently released a report purporting to analyze the economic impact of the oil and gas drilling years on the local communities. Jeremy McGraw explains.