Appalachian Basin

The Art of the Denial

It’s always an eye-opening experience to read one of our opposition’s putdown responses to any study documenting the obvious contributions of natural gas to the livelihoods of those areas where it happens.  Denial is an art form for many of our friends on the other side and art economist Jannette Barth provides one of the very best examples.  Her latest piece, Critique of PPI Study on Shale Gas Job Creation, is being heralded across the anti-gas universe as discrediting the PPI report titled Drilling for Jobs: What the Marcellus Shale Could Mean for New York (see Occupy DRBC for example), but is really more of a rant – a recitation of every talking point employed by opponents to argue against developing natural gas in the DRBC watershed and in New York State.  She does everything she can to deny the visible uplifting, by natural gas development, of whole communities that were previously economically depressed, as is the case for much of  rural America outside the natural gas regions.

Barth’s Marcellus Shale Studies Anything But Independent

Barth, who frequently identifies herself as “senior economist” for something called the Pepacton Institute (which she claims, later in her critique, to have  founded), makes much of the fact the PPI study had industry funding, as if any academic study of consequence did not require funding which often comes from interested parties, such as industry.  Unless academics are willing to donate their time and resources than someone has to compensate them for their time.  Most university and institutional research has outside support and to suggest this corrupts the process is to indict the entire system.

Let’s also be clear this type of accusation can be just as easily levied at anti-development studies.  Barth cites Susan Cristopherson of Cornell University, for example.  Ms. Cristopherson’s is funded by the Park Foundation, a funder of all things that are opposed to natural gas development, including the Howarth study listed later in her critique.

One also wonders, where the Pepacton Institute gets its funding? Or is Jannette Barth simply operating under a different name, given she shares an address with the organization?  The Institute appears to have no website and is organized as a Limited Liability Company, so its sources of funding can’t be identified.  Convenient, isn’t it?  Regardless, Barth is hardly an independent observer qualified to judge the independence of others.  She is a well established member of the opposition to natural gas development, including a role as a member of a Delaware County Anti-Gas Drilling March & Rally committee.  Her “critique” of the PPI study is a matter of advocacy, not impartial science or review.  We don’t object to that, being advocates ourselves, but we do find it more than a little ironic when she asserts an industry funded study lacks independence.

That word, “independent,” gets used quite a bit by those wishing stop natural gas development.  However it’s authenticity in use is often in question. We note the work of Headwaters Economics, for example, is often cited by Barth for its “independent academic research.”  This group also proudly proclaims its independence on its website, but then lists among its funders two foundations.  One is the Bullitt Foundation, which has given Headwaters Economics $25,000 while also giving extensively to anti-gas groups such as American Rivers, EarthJustice and Earthworks, along with the Tides Foundation.  The other is the  V. Kann Rasmussen Foundation, which also funds Tides and groups such 350.0rg, headed by Bill McKibben, a noted anti-gas activist who has teamed with Josh Fox to fight natural gas development.  It’s not too hard to see these two foundations’ priorities, or what their expectations of Headwaters Economics might be, using Barth’s rule that money taints opinions.  We don’t necessarily hold that view, but she clearly does, and by her standards, Headwaters Economics is anything but the independent source she claims.

Barth’s Claims Are Contradictory

Let’s put aside the question of whether her research is independent to examine what Barth claims and whether it makes sense.  Employing some sophistry from the Keystone Research Center, an agenda-driven progressive think tank, Barth attempts to rebut Pennsylvania employment data, but the Marcellus Shale Facts (issued by the Pennsylvania Department of Labor and Industry – see excerpted chart below) speak for themselves.  They indicate core Marcellus Shale industries employment for the 2nd quarter of 2011 was up 13,500 (+131%) over the same period in 2008.  Marcellus Shale related industries employed a total of 229,000 in 2011, while across the board Pennsylvania industries lost 140,000 jobs (-2%).

Marcellus Shale, in other words, was extremely important in saving the Commonwealth from further economic decline.  Yet, Barth wants everyone to believe the 48,000 new hires reported in 2010 were meaningless, as if a new hire was not a new job if it replaced or saved an existing job.  Set aside the fact that even if this is true the income gained in these new industry roles often exceed that individual’s earlier compensation.  For example, the average median household income in Pennsylvania is$49,501 according to the U.S. Census while the average wage in Pennsylvania Marcellus core industries is close to $75,oo0. It is easily discernible that someone who finds themselves newly employed in a Marcellus core industry is, by themselves, making $30,000 more than the average Pennsylvania household.  One can easily see how this additional income could have an immediate impact on a local economy as it is, literally, new money being brought into an area.

Mining and Logging Employment Growth in PA

The larger point, though, is that Barth wants it both ways.  She wants to say job growth is of little or no consequence while simultaneously saying the quick growth will inevitably lead to a bust.  What is this about quick job growth, if it is so irrelevant?  Unfettered by such inconsistencies, she argues “a long-term bust will devastate counties in upstate New York.”  Given these inconsistencies this argmument just doesn’t resonate.

Likewise, Barth uses data from counties with conventional gas well development to suggest this activity does nothing for poverty levels, median household incomes or unemployment rates.  Then, five pages later, she chides PPI for not pointing out the vast differences between historic gas development, as has taken place in New York State for hundreds of years, and the newer combined technology of horizontal drilling and hydraulic slick water fracturing.  Apparently, it’s just fine to lump everything together when it suits her purpose, but strict distinctions are important in other cases, depending on Barth’s point of attack.

Barth’s Critique Is Largely Speculative

Perhaps the worst aspect of the Barth critique is that so much of it is speculative.  Consider the following:

  • Barth says “the PPI report does not address the anticipated declines in employment in other industries vital to the upstate New York State economy as a result of gas drilling” but offers no credible evidence this would happen.  She simply asserts an opinion as fact and does the same thing two paragraphs later when she blithely alleges “tourists will no longer be interested in visiting some of New York State’s most treasured destinations.”   Yet, a recent Penn State study indicated 29% of Bradford County tourism entities said sales had grown due to natural gas, while the other 71% reported sales had not changed.
  • Barth further alleges that “many businesses are ‘crowded out’ of a region when an industry that offers short-term higher paying jobs comes in” but, once again, puts forth little more than a supposition.  She says “in Pennsylvania, for example, the natural gas industry has attracted workers by offering relatively higher wages, causing some workers to leave their jobs with existing businesses who cannot afford to compete with the wages offered by the gas industry.”  Again, no evidence is offered to support this claim. Not a single citation. But, even assuming it is true, it’s hard to see how this is a problem. The point of growing an economy is to enable workers to advance to better paying positions, thus opening additional opportunities for others.  Seems Barth is asserting everyone in rural Pennsylvania and New York would better off staying in the same job for decades with no opportunity for advancement.
  • Barth states that “property values are likely to decline as banks refuse to issue mortgages on lands with gas leases” but, of course, offers no examples – just citations from other speculative reports.  The evidence, in fact, is precisely in the opposition direction.  We discussed this issue in an earlier post and noted farmland values in Bradford County averaged $6,984 per acre for properties of 10 acres or more, while in New York State counties generally adjoining Bradford and Susquehanna Counties (Broome, Chemung, Steuben and Tioga Counties) the same type of land sold for prices of $1,200 to $2,400 and typically well below $2,000 per acre.  Attorney John Spall also noted on these pages that mortgages are being issued.  Finally, my own research in Wayne County revealed there were numerous mortgages recorded with gas leases.  Among these, many lending institutions obtained assignments of the lease revenues as additional collateral indicating gas leases add value and facilitate lending.

There are numerous other examples of the speculation that characterizes this critique of the PPI study, but the reader will get the point.  Jannette’s review of the PPI study isn’t about the study.  It’s about denying the benefits inherent in natural gas development. Benefits that are obvious to anyone who visits the region where Marcellus development is occuring and sees how Williamsport is coming to life, witnesses the beehive of activity in Towanda or observes the palpable prosperity of Montrose and Tunkhannock.  It’s hard to deny but for someone skilled in the arts, as Ms. Barth is, it’s apparently possible.  She’s mastered the art of the denial.

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