Study Shows Shale Development Will Positively Affect Western Maryland
A study recently released by the Regional Economic Studies Institute (RESI) at Towson University shows shale development will provide many benefits for western Maryland. With the Marcellus Shale lying beneath parts of western Maryland, the report specifically looked at how two counties – Allegany and Garrett – would be affected from development. While the report looked at many aspects, one thing is clear. These two Maryland counties would greatly benefit from thousands of jobs and hundreds of million dollars in newfound revenue created from the safe and responsible development of the Marcellus Shale.
The timeframes for this study include a short-term development period from 2017 when the first well is developed through 2026 and then a ten-year long-term look at the economic impacts following the last well developed in 2026. Two scenarios were also presented with the study:
- Scenario 1, where 25 percent of the total shale gas would be extracted
- Scenario 2, where 75 percent of the total shale gas would be extracted.
Taking into account the timeframes and development scenarios the study looked at shale development impacts including: housing, trucking, tourism and economic.
With the influx of highly skilled jobs in the oil and gas industry there may be a strain on available housing to account for job creation and workers until a local workforce is developed. However, according to the study Western Maryland has a sufficient housing surplus to handle the projected population growth.
“Based on the experience of areas of similar size and drilling activity, RESI does not expect rental housing to become unaffordable due to the relatively small number of wells expected in both drilling scenarios and the substantial housing surplus in the area.” – p. 11, Impact Analysis of the Marcellus Shale Safe Drilling Initiative, RESI of Towson University
The study also took a look at what the influx in truck traffic would look like for Western Maryland, given both development scenarios.
- Scenario 1 – “The increase in truck activity for Western Maryland amounts to an average annual addition of 22,595 truck trips for heavy-duty trucks and 7,903 for light-duty trucks.”
- Scenario 2 – “The increase in truck activity for Western Maryland amounts to an average annual addition of 67,785 truck trips for heavy-duty trucks and 23,708 for light duty trucks.”
While there is increased truck traffic associated with shale development – hauling water and sand – the study also acknowledges that truck trips decrease significantly. However, what was not presented in the numbers above is the delivery of water via pipelines instead of trucks which could reduce the level of truck activity by 30 percent. One of the many examples of this in Pennsylvania is Seneca Resources who has been hauling water to their sites using temporary pipelines. This has significantly cut down on truck traffic in the Commonwealth by an average of 1,000 trucks per well.
The study found that there is a lack of data regarding the co-existence of tourism and drilling and that the possible impacts to tourism activity were difficult to quantify. That being said, the study stated:
- If drilling occurs, nonresidents may have more flexibility to avoid Western Maryland if they perceive the local trails, streams, and woodlands to be of lesser quality near drilling activity—ultimately impacting the popular second-home market of Garrett County.
- Negative economic impacts on the tourism industry may be offset by increased hotel taxes in the short term, but state and local governments will need to evaluate existing hotel and amusement tax policies to fully capture the expenditures of a transient workforce
While there may be a lack of data, it is important to look at counties that already have shale development, like Washington County, Pennsylvania. According to a recent report, Washington County’s tourism industry supports 5,840 jobs and generates over $149.4 million in federal and state revenues per year.
Harlan G. Shober, Jr of the Washington County Board of Commissioners stated:
“In 2006 when shale development began Washington County direct spending was $333.0 million… In 2012 direct visitor spending was $740.7 million.”
Thanks in no small part to shale development direct spending in the county has more than doubled in the last six years. Looking at Washington County, Pennsylvania it’s evident that not only do tourism and shale development co-exist but tourism actually thrives with increased activity.
When the economic impacts felt by Western Maryland from shale development were broken down into each scenario and county, the impacts looked like this:
Scenario 1 – 25 percent extraction
- During the development years, the greatest change from the baseline will occur in 2021, adding 546 jobs, $51.2 million in output, and $13.5 million in wages.
- During the height of drilling activity, tax revenues will increase annually by $0.6 million on average. During the period after active drilling, tax revenues will increase by $0.3 million annually.
- During the development years, the greatest change from the baseline will occur in 2021, adding 1,294 jobs, $143.4 million in output, and $35.6 million in wages.
- During the height of drilling activity, tax revenues will increase annually by $2.4 million on average. During the period after active drilling, tax revenues will increase by $0.8 million annually.
Scenario 2 – 75 percent extraction
- During the development years, the greatest change from the baseline will occur in 2024, adding 952 jobs, $102.4 million in output, and $26.9 million in wages.
- During the height of drilling activity, tax revenues will increase annually by $1.7 million on average. During the period after active drilling, tax revenues will increase by $0.7 million annually.
- During the development years, the greatest change from the baseline will occur in 2021, adding 2,743 jobs, $341.8 million in output, and $80.2 million in wages.
- During the height of drilling activity, tax revenues will increase annually by $4.4 million on average. During the period after active drilling, tax revenues will increase by $0.9 million annually.
The thousands of jobs this industry will create are not just jobs, they are family sustaining jobs. And as far as the tax revenues go, they are nothing to scoff at, we’re seeing huge amounts of tax revenue in other states that host shale development and Maryland won’t be any different.
From lower energy prices to family sustaining jobs, shale development has been a shot in the arm for a state’s economy that allows development. If Maryland allows shale development, it too will see the vast benefits other states are reaping throughout the country.