Economic Impact of Gas Extraction in Marcellus Shale.

Susan Christopherson from Cornell presented preliminary results of Cornell study at a Legislative Briefing in Albany on  11/18/10

I. There will be a briefing/news conference Thursday, November 18, 9:00-10:30 AM, Room 711A, Legislative Office Building, Albany, N.Y.,  to present early results from this study.

II.  Based on the research New Yorkers for Sustainable Energy Solutions Statewide (NYSESS) has done on this issue, we expect central highlights to include:

1. The two extant economic impact studies extensively referred to as supporting shale gas development in the dSGEIS for Marcellus (Broome County study and Penn State study), are essentially fatally flawed as as documents for  public policy guidance; they do not address both positive and negative impacts. A number of analysts have previously come to this conclusion.

2,  When regions/counties with and without natural gas production are compared on a variety of socio-economic dimensions, the gas counties do not show any overall advantage and may be at a long-term socio-economic disadvantage. Again, several other analysts have reached this conclusion

3.  Energy costs to residents of gas producing states do not decrease with increases in production: no local energy advantage. This matter also was addressed by Senator A. Thompson a year ago with industry representatives and they could not confirm any local advantage.

4. Taking these together, one could conclude that New York has considerable planning and policy development yet to do before any shale gas drilling starts.

Stanley R Scobie, Ph.D., Principal, NYSESS, 607.669.4683  [NYSESS is not organizing or sponsoring this briefing, and is providing information solely for the benefit of the community]
III. Following the briefing , at 11:00, Professor Christopherson and other individuals involved with energy policy will appear on the Capitol Pressroom radio show (announcement follows).

The Capitol Pressroom rundown for Thursday 11/18/10

On Thursday a briefing is scheduled on the economic impact on shale gas drilling; it will be immediately followed by an Assembly hearing on staff losses at the NYS Department of Environmental Conservation.  In other words, conservationists, drilling company representatives, academics, farmers and a whole host of other gas drilling stake-holders will be converging up on the Capitol.   Being opportunists, we plan to take advantage of this bounty.  Our guests include:

– Petroleum engineer John Holko, president of Lenape Resources (studio), who is scheduled to testify before the Assembly Standing Committee on Environmental Conservation on behalf of the Independent Oil & Gas Association of New York.

– Southern tier Democrat, Assemblywoman Donna Lupardo, D-Binghamton (studio).
– Dr. Susan Christopherson of Cornell who will discuss both short and long term economic impacts of horizontal natural gas drilling.

– Wes Gillingham of the Catskill Mountainkeeper (studio).



Jannette Barth, Ph.D. comments on Broome Co. Economic Impact Study.

Economic study on gas drilling is full of holes


By Jannette M. Barth • November 18, 2010, 12:00 am

In her opinion piece “County gas lease deal is good for taxpayers,” Broome County Executive Barbara Fiala states that “regardless of the number of wells, there will be a positive local economic impact.”

Fiala bases her conclusion on an economic study that is severely flawed. It neglects a number of crucial factors that must be taken into account if Broome County is to make sound decisions based on an accurate assessment of the facts.

* It is not clear that jobs will go to Broome County (or even New York) residents. Reports from Pennsylvania indicate that 70 percent of gas-rig jobs are going to people from out of state who are often transient, non- permanent workers, sending their earnings to their families to spend in their home states.

* There is no mention of the enormous cost of repairing roads and bridges that will be damaged by heavy equipment and the hundreds of tanker trucks that are required to haul water and wastewater to and from every well site.

* The analysis does not address the cost of mitigating environmental damage, such as drinking water contamination and fish kill. There is evidence of both in Pennsylvania.

* The study fails to consider that communities will probably be forced to increase their spending on emergency medical care, first responders and law enforcement. Local hospitals and fire departments may be ill-equipped to handle industrial accidents involving heavy machinery and toxic chemicals. Drilling operations typically involve large numbers of transient workers, who may not have proper regard for the protection or betterment of the community.

* The study makes no mention of the economic costs of potentially severe health impacts such as cancer, brain damage, respiratory disease and endocrine disruption that have been connected to chemicals used in the hydraulic fracturing process.

* The study seems to assume that property values will increase; in fact they may decrease. In Wise County, Texas, in the Barnett Shale, it has been reported that real estate appraisers have discounted valuations by 75 percent if a property has a gas well.

* Declines in other industries are not reflected in the economic study. The negative effect on natural beauty and the environment will be sure to hurt the tourism industry; fishermen and hunters will be much less likely to settle on Broome County as a destination.

* The study focuses on just a 10-year period. But what happens after those 10 years? Will all the gas and the gas money be gone? Will the land and water be left polluted? Will the population be ill?

* Other studies have concluded that regions that have encouraged extractive industries experience relatively high poverty and unemployment rates in the long term.

I encourage Fiala to protect the people, the environment and the economy of Broome County by being sure to consider all potential effects prior to supporting a county gas lease.

Barth, a resident of the Town of Hancock in Delaware County, has a doctorate in economics.

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