Appalachian Basin

Washington County: A Shale Success Story

When the first successful Marcellus Shale well was drilled in Washington County, Pennsylvania over a decade ago, no one could have foreseen the tremendous economic impact and growth this industry would bring. A new study recently released by the Washington & Jefferson College Center for Energy Policy and Management quantifies just how great the economic impact has actually been for Washington County – the “Energy Capital of The East.”

The study looked at the economic impact of the upstream and midstream activities of shale development in the county from 2011 to 2013. According to the report (emphasis added):

  • “The total county economic output impact increased from approximately $1.7 billion to $2.4 billion, which represents 15% to nearly 20% of total county output during those years.” (Pg. 4)
  • “The total labor force impact expanded from approximately 8,000 to more than 10,000, which is equivalent to 7% to 9% of total county employment. (Pg. 4)
  • “The total state and local tax revenue impact increased from around $90 million to $160 million.” (Pg. 4)
  • “The governments of Washington County and its municipalities received more than $24 million in impact fees, and the county received over $900,000 in Marcellus Legacy Fund distributions and over $10 million in lease/royalty payments during 2011- 2013.” (Pg. 5)
  • “The total number of shale wells spudded during the three year period in Washington County represented 9%, 14.4%, and 18.2% of the total number of wells spudded in Pennsylvania respectively, reflecting the growing role of Washington County in Pennsylvania’s shale resource development.” (Pg. 5)
  • “In addition to total output and employment, shale drilling activities indicated association with other economic activities of Washington County which is reflected in the following economic indicators: income from rents, royalties, patents, and copyrights, hotel occupancy tax revenue, housing prices, real estate tax revenue, sales tax revenue, and financial service activities. “ (Pg. 5)

Pennsylvania’s Marcellus Shale has been nothing short of impressive as oil and gas operators continue to develop the formation. Last year, the state produced 4 trillion cubic feet of natural gas and provided 16 percent of what the entire United Stated consumes on an annual basis. This type of development has created the need for an expanded labor force across the state, especially in Washington County. According to the report (emphasis added):

“As Washington County has expanded its population, it has also expanded its labor force. In January 2000, there were 97,530 workers in the labor force. By January 2010, that number had jumped to 106,085 and in January 2014 to 107,258—an increase of nearly 10 percent between 1990 and 2014 according to the Bureau of Labor Statistics (Bureau of Labor Statistics, 2014).” (Pg. 21)

With an expanded labor force fueled by the oil and gas industry, Washington County has been able to decrease its unemployment rate by 50 percent between 2010 and 2014. From the report (emphasis added):

“Given the number of firms that have been established or expanded in recent years, Washington County has also been able to reduce its unemployment rate. The county pared unemployment down from approximately 10 percent in February of 2010 to below 5 percent in September 2014 (Bureau of Labor Statistics, 2014). (Pg. 21)

New Revenue Stream

Washington County has also benefited from new revenue streams provided by the oil and gas industry. The chart below shows the shale gas revenue for Washington County:Shale Gas Revenue for Washington County

In total the county has received over $35 million, which has been used to offset the cost of county projects that would usually come out of tax payers’ pockets. In fact, because of these new revenue streams the county has one of the lowest tax rates in Southwestern Pennsylvania. Washington County has also experienced an increase in sales tax revenues with a clear correlation between wells developed and collected sales tax:

Sales Tax Revenue for Washington County

Jeff Kotula, President of the Washington County Chamber of Commerce had this to say about the study’s findings:

“The Washington & Jefferson study really proves what we’ve witnessed firsthand in Washington County. The natural gas industry is creating jobs and new opportunities for our businesses and residents. The real takeaway is finding even more ways to build upon this resource and further develop the region as a true energy and diverse manufacturing hub for future generations.”

By working with the oil and gas industry, Washington County, Pennsylvania has been able to increase tax revenues, lower tax rates for its residents, and put hardworking Americans back to work, all while providing affordable energy for people living states away. The Energy Capital of The East is a success story that’s still on chapter one. As this industry continues to grow here in the Commonwealth so will communities across the state.

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