Of the items mentioned to be considered in the Pre-Filing Environmental Review Process is the socio-economic impact. I would like to comment on the Economical Development Analysis released by PennEast this past Monday, on Feb. 9, 2015. The PennEast Economical Development Analysis was produced by EConsult Solutions and Drexel University and it eerily mirrors a similar report produced by EConsult Solutions on Feb. 5, 2015 for Sunoco Logistics’ Mariner East project[i].
PennEast Economic Development Analysis February 9, 2015[ii]
The original Pre-File documents submitted by PennEast, during the Open Houses, and in numerous statements made by PennEast representatives to media outlets, stated the PennEast project would create 2,000 jobs.
The recently released Economic Development Analysis claims 12,160 jobs. This is a difference of 10,160 jobs and should raise red flags as to the reliability and accuracy of both PennEast’s original figures and that of the Economic Development Analysis.
Anyone working with databases or modeling software would be familiar with the acronym GIGO. GIGO stands for Garbage In-Garbage Out. Briefly it means if the input data is garbage, the output data will also be garbage.
A 2011 Working Paper[iii] from Cornell University stated:
“For policy makers and citizens, the utility of the information provided by these Economic Impact Reports (EIRs) depends on a clear understanding of the limitations of input/output models and what they can and cannot tell us. For example, while the models estimate the number of jobs that could be created with a certain level of expenditures…., they cannot tell us how many actual jobs will be created, who will get those jobs, or what they will pay. The fact that input/output models can only provide job estimates is often ignored, and those estimates are portrayed incorrectly as real job numbers. In addition, because of the simplifying assumptions necessary to construct input/output models, they cannot be used to analyze wide-ranging structural changes in a regional economy”
For those of us who have followed the Natural Gas Industry, we are familiar with various industry contracted economic impact reports and the job creation numbers. Claims of 600,000 jobs created in the Marcellus Shale region is one that is often touted. However, this number is based on data input which included ancillary jobs as strippers (i.e. exotic dancers) and prostitutes.[iv]
Another example of job creation and pipelines is from Kinder Morgan’s 2013 Trans Mountain Expansion pipeline in Canada. In Section 5.6.1.1. Kinder Morgan states[v]:
Spill response and clean-up creates business and employment opportunities for affected communities, regions, and clean-up service providers, particularly in those communities where spill response equipment is, or would be, staged.
I ask how many of the 12,160 or 2,000 jobs to be created will comprise of exotic dancers, prostitutes or Spill and Clean-up workers?
The EConsult report under Section 3.4, Design and Construction Economic impact states:
“The workforce for the Project is likely to be comprised of personnel from across the country due to the specialized nature of pipeline construction.”
This deviates from the impressions made by PennEast and as reported in the media regarding jobs for people who actually live in Pennsylvania and New Jersey.
PennEast’s advertising campaigns nor do media reports clarify that the jobs would most likely be held by “personnel from across the country due to the specialized nature of pipeline construction.”
We need to ask how many of the 12,160 or 2,000 jobs will be held by workers who call Pennsylvania or New Jersey home.
The economic analysis section title “Ongoing Operations Economic Impact” states:
In Pennsylvania, the total potential estimated economic impact will be approximately $20.9 million each year, supporting 88 jobs with $7.5 million in wages. Across New Jersey, operations of the Project are predicted to generate a total potential estimated annual economic impact of $2.1 million, supporting 10 jobs with $800,000 in wages.
Let’s do some math: 88 jobs in Pennsylvania plus 10 jobs in New Jersey equals a total potential annual impact of 98 jobs. What happened to the other 12, 062 jobs? Also, please note the keywords of potential and estimated. There is a vast difference between what modeling software produces and reality.
Former Governor Tom Corbett had routinely cited 200,000 jobs have been in the Pennsylvania Marcellus Shale area. The Marcellus Shale Coalition, an industry funded lobbying organization, claims:
“..a recent study by researchers at Penn State University found that the natural gas industry will create nearly 212,000 well-paying jobs through the end of the decade.”[vi]
There is confusion with these numbers; Corbett claimed 200,000 have been created while the Marcellus Shale Coalition claims 212,000 by the end of the decade. In either case, these numbers are for political and profit-driven goals.
Reality tends to very different. In 2013 the Pennsylvania Department of Labor and Industry stated that approximately 28,000 people currently working in these six oil and gas industries which include[vii]:
- Crude petroleum and natural gas extraction
- Natural gas liquid extraction
- Drilling oil and gas wells
- Support activities for oil and gas operations
- Oil and gas pipeline and related structures
- Pipeline transportation of natural gas
Why the difference in numbers? It depends on who is doing the counting, how it’s being counted and who has the most to gain by inflating these numbers.
FERC must conduct a realistic study of the economic impact of the PennEast Pipeline based on facts not garbage.
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[i] The Economic Impact Of Sunoco Logistics’ Mariner East Projects In Pennsylvania | Econsult Solutions | February 5, 2015 | http://www.econsultsolutions.com/wp-content/uploads/Sunoco-Logistics-Mariner-East-Economic-Impact-Report.pdf?utm_source=Sunoco+announcement&utm_campaign=Economic+Analysis+of+Detroit’s+Food+System&utm_medium=email.
[ii] Penneast Pipeline Project Economic Impact Analysis | Econsult Solutions & Drexel University School of Economics | February 9, 2015 | http://penneastpipeline.com/economic-impact-analysis/
[iii] A Comprehensive Economic Impact Analysis Of Natural Gas Extraction In The Marcellus Shale | Working Paper Series | 2011 | http://www.greenchoices.cornell.edu/downloads/development/shale/Thinking_about_Economic_Consequences.pdf
[iv] PA Jobs Numbers Poor In Spite of Marcellus Shale | Energy Policy Forum | Deborah Rogers | February 4, 2013 | http://energypolicyforum.org/2013/02/04/pa-jobs-numbers-poor-in-spite-of-marcellus-shale/
[v] Kinder Morgan | Trans Mountain Pipeline (ULC) | Trans Mountain Expansion Project | Volume 8A – Marine Transportation - Effects Assessment and Spill Scenarios |Page 8A–615 | Section 5.6.1.1 | http://transmountain.s3.amazonaws.com/application/V8A_3_of_4_5_TO_8_MAR_TRANS_ASSESS.pdf
[vi] The Marcellus Shale Coalition | http://marcelluscoalition.org/job-portal/
[vii] U.S. energy boom has big impact on trade, but not jobs | NPR StateImpact | By Marie Cusick | December 5, 2013 | http://stateimpact.npr.org/pennsylvania/2013/12/05/u-s-energy-boom-has-big-impact-on-trade-but-not-jobs/
© 2014 by Dory Hippauf
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