A recent Wall Street Journal editorial (“A Tale of Two Shale States“) highlights Pennsylvania’s shale gas boom success — and New Yorks refusal to develop similarly rich shale gas resources. The Marcellus shale, which covers 65 million acres through Ohio, West Virginia, western Pennsylvania, and southern New York, is believed to contain more natural gas than Saudi Arabia has oil.
Hydraulic fracturing and horizontal drilling on the Marcellus Shale have brought enormous gains in jobs and revenue to Pennsylvania:
Statistics from Pennsylvania bear this out. The state Department of Labor and Industry reports that Marcellus drilling has created 72,000 jobs between the fourth quarter of 2009 and the first quarter of 2011. The average wage for jobs in core Marcellus shale industries is about $73,000, or some $27,000 more than the average for all industries.
The Pennsylvania Department of Revenue says drillers have paid more than $1 billion in state taxes since 2006-and the numbers are swelling. In 2011’s first quarter, 857 oil and gas companies and affiliates paid $238 million in capital stock and foreign franchise taxes, corporate income taxes, sales taxes and employer withholding. This exceeds by some $20 million the total payments in 2010.
The revenue department also identified some $214 million in personal income taxes paid since 2006 that can be attributed to Marcellus shale lease payments to individuals, royalty income and asset sales. And all of this with no evidence of significant environmental harm.
Just across the state line in New York, however, draconian restrictions on hydraulic fracturing or “fracking”, the method used to extract shale gas, effectively created a moratorium on drilling in the Marcellus shale. New York faced a budget deficit of $8.5 billion in fiscal year 2011 and has an overall unemployment rate over 8%. Hispanics (11.8%), blacks (14.3%), and New Yorkers without a high school diploma (12.2%) face staggeringly high unemployment rates. Yet New York continues to shun billions in economic activity and thousands of jobs because of overblown fears of the environmental harms of fracking.
The Manhattan Institute studied what New York stands to gain if it loosens its fracking restrictions:
The Manhattan Institute study shows that a quick end to the moratorium would generate more than $11.4 billion in economic output from 2011 to 2020, 15,000 to 18,000 new jobs, and $1.4 billion in new state and local tax revenue. These are conservative estimates based on a limited area of drilling. If drilling were allowed in the New York City watershed-which Governor Andrew Cuomo is so far rejecting-as well as in the state’s Utica shale formation, the economic gains would be five times larger.