Information for Businesses
The large value of the recoverable natural gas in Marcellus shale, estimated by some at $500 billion, means there is the potential for major economic impacts. Experience with Barnett shale in north Texas indicates potential impacts and opportunities here in Pennsylvania.
Where the Jobs and Income Are
The impacts of natural gas affect more than just the specific firms directly involved in the industry. Local businesses that supply the industry, such as oil field service companies, local contractors, area surveyors, attorneys, and local fuel and stone suppliers clearly benefit, as do local businesses catering to employees, such as local retailers and restaurants.
The Perryman Group report from Texas (www.bseec.org/images/summaryreport.pdf) identifies three separate types of economic activities related to natural gas and their share of economic activity including:
(1) Exploration, drilling and operations (67 percent gross product [GP], 62 percent personal income [PI])
(2) Leasing and royalties that go to landowners (11 percent GP, 12 percent PI)
(3) Pipeline infrastructure (22 percent GP, 27 percent PI)
The employment impacts related to natural gas in the Perryman Group report show similar trends:
-- Exploration, drilling, and operations (58 percent of new permanent jobs)
-- Royalty and lease payments (14 percent)
-- Pipeline infrastructure (28 percent)
As the industry expands within Pennsylvania, more of these jobs and revenues should be reaching local residents, either as new hires or as the industry employees purchase or rent homes in the region. Communities can increase the possible economic benefits of a growing natural gas industry by planning ahead to respond to the growing population within their area.
Which Industries Benefit
As expected, the industrial sector with the largest gain from the Barnett shale is the crude petroleum and natural gas industry, accounting for about one fifth (21 percent) of personal income product increases and 7 percent of new jobs. Retail trade accounts for about 16 percent of increased personal income and 27 percent of the new jobs, while new construction accounts for 10 percent of increased personal income and 9 percent of new jobs. Eating and drinking establishments similarly benefit accounting for 5 percent of personal income and 15 percent of new employment.
Implications for Pennsylvania Local Businesses
Pennsylvania businesses should consider whether and how they can work with the gas industry to supply materials, contract services, or otherwise partner with them. The industry finds it advantageous to work with local firms, rather than bringing in others from outside the community, so there are clear opportunities for businesses looking for this.
Businesses - Publications
- Potential Economic Impacts of Marcellus Shale (pdf)
- Drilling for Dollars by the Perryman Group (pdf)
- Sublette County (Wyoming) Socioeconomic Impact Study (pdf)
