Sunday, September 1, 2013

Marcellus Shale Gas Jobs? Data tells a different story

This morning I decided to look into the claim that Marcellus Shale-Gas extraction will bring jobs to New York.

Wherever possible, I like to go to original sources of data. Here are the data sources for this graph:

PA Drilling Data (data first reported Jan '09)
Unemployment Data:

The green graph of number of Marcellus Wells Drilled was only available starting Jan '09.The pink line over the green graph is a 3-month moving average, which smooths out the spikes
and shows general trends better.

Some observations:
  • Unemployment rates for NY and PA have been about the same over the last eight years.
  • Unemployment for both NY and PA rose sharply and DOUBLED from about 4.5% to about 9% starting spring '08 through end of '09 coincident with a rise in the number of Marcellus wells drilled.
  • In July 2010, at the peak of the Shale-Gas Boom, Pennsylvania's unemployment rate jumped to 9.3%, which was the highest the state had seen in 23 years. (May 1984)
  • From about Sept 2011 to June 2012, the PA unemployment fell from 8.5% to 7.5%.
  • During that same time interval, the 3-month moving average of Marcellus Wells Drilled (pink line over the green bar-graph) ALSO FELL from 195 to 107, nearly by half.
  • A report issued by Keystone Research1 claims that the Gas+Oil industry added a staggering 9,700 jobs over a two year period, from Dec 2010-Dec-2012, however the actual unemployment rate in Pennsylvania remained between 7.4-8.5% over that period.

To be fair:
  • The was one period of about 10 months between July 2010-May 2011 where there was a general increase in the number of wells drilled, while there was a decrease in the unemployment rate. However, as the graph shows, it was not lasting, and didn't come close to causing a recovery to the pre-Marcellus drilling unemployment rate of ~5%.

Conclusions: Marcellus shale gas drilling boosters are claiming this industry has created tens of thousands of jobs overall in Pennsylvania, however, this is not reflected in Unemployment Rates. In fact, if anything, rates of unemployment seem to be closely correlated and directly proportional to the number of wells drilled: As more wells are drilled, the more unemployment goes up.


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