Marcellus Shale

Upstate New York Is in Trouble – Natural Gas Is the Solution

Recently I provided  remarks at the fundraiser for Jennifer Huntington’s appeal of the misguided Middlefield court decision.  I am now sharing these on our blog as they include a lot of  background information our team has shared over the last year.  The  takeaway is that upstate New York is facing incredible challenges to its economic viability.  This is especially true in Western New York where the single light at the end of the tunnel is natural gas development. What you are allowed to make of that opportunity may well determine the future of these areas and their residents.

Rural New York Is In Trouble

I grew up in Afton, New York which is located in Chenango County.  My family has a hundred acre farm and I own five acres on which I’d like to eventually build a home.  Like so many others of my generation who live in Oneonta, and across the Southern Tier, I hope to stay if economic opportunities permit.  The Oneonta area benefits slightly from having SUNY Oneonta and Hartwick College but, unfortunately, most of our rural areas are in big trouble and those troubles have just begun.

This is what motivated me, as a young adult just out of school and feeling the pressure of the dwindling economy, to take such an interest in natural gas.  It inspired me to interview for a field director position at Energy in Depth. Being from upstate New York, I saw, sadly, my neighbors’ farms falling into the hands of banks through foreclosures. I saw my friends and family suffering to find money to put kids through school, pay taxes, eat and just survive.

Consider These Realities

Every single county in Western New York lost population between 2000 and 2010. This is a fate that is damaging to any town, especially a college town such as Oneonta. We want to educate young adults and have opportunities for them as they complete their  studies.  They are, after all, the future of the area.

Most of the Southern Tier lost population and the remainder barely gained population.  Too many young adults are leaving the area to find work after they’ve spent thousands of dollars educating themselves. After graduation, many young adults say goodbye and head to other states to find a job and plant their roots.  Sadly, their families will grow up hundreds of miles away from where they did and fragmentation of the larger family occurs.

This is noticeable in statistics.  The median age in counties we cover has increased by 2.9 years in a decade.  At current rates 20% of the population is expected to be age 65 or above by 2030. A community of mostly seniors is not a community and the implications of a community without adequate young people are wide-ranging and mostly negative.

At the same time, school enrollments are declining. Broome County, for example, lost 4,745 students in a decade. This pattern is being witnessed throughout our rural areas.  If you think maintaining schools is hard with growth, try to pay for the same infrastructure with a shrinking student base.

Agriculture, while a valuable asset, is not keeping kids here. Steuben County agricultural sales, for example, are still $35 million lower than they were in 1978 in real inflation-adjusted dollars. Moreover, drive through the Village of Perry, the heart of New York’s dairy industry. It’s a ghost town. Farmers can’t afford to buy new equipment, pay taxes or sustain their farms. So, the future doesn’t hold a lot of promise for rural New York, except for natural gas development.

The Alternative Offered by Natural Gas

Bradford County, Pennsylvania, just south of Chemung and Tioga Counties,  has one of the lowest unemployment rates  in the Commonwealth at 6.4%. Compare this to its New York neighbors, Steuben County for example has an unemployment rate of  over 10% as of January 2012. New York jobless rates, specifically in Steuben County, would be higher still but for New Yorkers finding jobs in Bradford and Susquehanna counties in Pennsylvania.

For example, one of my best friends from high school got his engineering degree from Alfred State University and now commutes  2.5 hours to work every day for the natural gas industry. Meanwhile, young adults with proper welding skills and certifications are earning up to $150,000 per year working on pipeline projects in Pennsylvania. These skills can be learned through local BOCES programs or other community college/trade schools.

Interestingly, the Bureau of Economic Analysis annually reviews how 366 metropolitan areas in the U.S. are doing economically. It measures the gross domestic product (GDP) generated in each, identifies the sources of growth or decline and ranks the areas compared to others. Ithaca and Williamsport are similar communities in size, with populations of roughly 30,000 persons each and per capita incomes of slightly of $19,000 in both cases. Both have heavy populations of students. Williamsport grew by 7.8% in 2010, ranking 7th in the nation for GDP growth in 2010, while Ithaca gained only 1.0%, giving it a rank of 252nd out of 366 metro areas. Williamsport grew its economy by $247 million (in constant dollars), while Ithaca added only $35 million.

Four years ago, Williamsport was feeling the pains of economic contraction as jobs were leaving. It faced a rust belt future. Ithaca’s economy was $32 million larger and the gap widened over the next two years to $169 million, but, in 2010, natural gas companies and those who service them came to Williamsport in earnest as exploration ramped up. Williamsport now has a $43 million advantage over Ithaca and a new Marcellus Energy Park that already has four tenants after a year.

Marcellus Energy Park Near Williamsport

Also, Bradford County was the subject of a recent Penn State study analyzing impacts of natural gas development on local economies. One-third of all Bradford County businesses said their sales had increased due to natural gas activity, and only 3% reported sales had declined. Half the financial businesses reported higher sales due to natural gas activity, as did 44% of retail trade, 38% of eating and drinking places and 33% of wholesale trade and business services. Employees grew in 75% of hotels and campgrounds, 24% of eating and drinking places, 22% of wholesale firms, and 14% of construction companies. About 29% of these tourism entities said sales had grown due to natural gas, while the other 71% reported sales had not changed.

Another Penn State study revealed large increases in Marcellus Shale related economic activity, with total spending increasing both directly and indirectly. This is all tanks to the increasing amounts of money the pubic is getting from natural gas.  Property values are also much higher in Pennsylvania than in New York.

The natural gas industry through direct employment, purchases of goods and services, royalties to landowners and tax payments and through other connections now support over 229,000 jobs– representing nearly two percent of the Commonwealth’s population.

What Could Be

Our region could see more balanced growth, more diverse economies, more families, higher property values, more stable markets and the ability of farmers to maintain their farms, possibly passing them down through the generations, if natural gas development goes forward. We’d also see our roads upgraded to conditions that are better than before with investments from natural gas companies.

The key is getting all these messages out and that’s what we do at EID Marcellus. We are your partners in spreading the good news about natural gas development and what it can do for the quality of life in Upstate New York.  It is the key to keeping young adults like me here for the future.

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