Everyone Wins – Not Just Landowners – When Marcellus Drilling Happens in a Community

Beverly HillbilliesOne of the favorite arguments used as a smokescreen by those opposed to Marcellus drilling is the classic class warfare argument. But it takes a lot of mental gymnastics to make it work in this case as the people who are supposedly the “fat cats” and the “lucky few winners of life’s lottery” are typically family farmers who have been scraping by for generations, just trying to hold on to the land they love. The fact that some of them “get rich” from gas drilling just doesn’t sit right with the elite city-dwellers. Kind of invokes images of the Beverly Hillbillies.

MDN has heard this “haves and have nots” class warfare argument in presentations from people like Cornell Professor Tony Ingraffea. It’s a disgusting, offensive and frankly bigoted argument, but there you go. It’s one of the favorites from anti-drillers.

The Pittsburgh Post-Gazette takes a new run at dressing up this pig of an argument with yet more lipstick:

A Pittsburgh Post-Gazette survey of municipalities in the Marcellus hotbed of Washington County reveals a scattered economic boon produced by the advent of drilling rigs, compressor stations, pipeline networks and processing plants.

Many residents have benefited directly; many more have not.

To be sure, the state overall has gotten wealthier through the influx of Marcellus Shale-related tax revenues.

On a local level, landowners leasing mineral rights throughout the county have pocketed tidy sums. A variety of small businesses have thrived. Jobs have been created. Some municipalities have raked in the cash through clever use of special fees on the drilling industry. And Canonsburg’s Southpointe office park has blossomed with tenants related to the natural gas industry.

By and large, though, those direct impacts are limited.

No hard numbers exist detailing how many people have leased their mineral rights. But Range Resources, the area’s biggest player, said that since 2008, it has made about $800 million in upfront payments to more than 10,000 landowners in Washington County, which averages out to $80,000 per leaseholder.

That amounts to perhaps 5 percent of the county’s 207,000 residents.

Officials from a number of the county’s 66 boroughs, cities and townships report little or no economic impact or improvement in quality of life for their residents and communities as a result of Marcellus activity, with one general exception: better roads — repaved by the companies that ruined them in the first place.

In some locales, drilling has not yet occurred; in others it likely never will. In more urban areas, there are few landowners with large tracts to lease.(1)

Those who argue against “the few who benefit” don’t seem to understand that economic activity ripples throughout an entire region and benefits many people—even people who don’t own an inch of land.

A story, also in the Pittsburgh Post-Gazette on the same day, highlights some of the small businesses that have benefited from the Marcellus Shale drilling boom.

Here’s one example from the story:

"In 2009, we were ready to pull the plug. I was so embarrassed about having to tell my employees. That was the worst part of it," remembers Michael Pascuzzi, co-owner of New Dominion Construction, about the company’s near bankruptcy 19 months ago. "Then, along came Marcellus Shale. It saved us."

Since December of 2009, the company has grown from 60 to 78 employees and has increased annual revenues from a low of $8.1 million in 2009 to more than $14.3 million this year.(2)

Another example: The Cherry Hill Grille, a restaurant next to the Village Green Golf Course in Mount Pleasant, PA, was able to stay open due to the influx of workers in the Marcellus Shale. It saved 60 jobs.

And this:

Business owner Paul Battista completely revamped his company, Sunnyside Supply, after serving the manufacturing and institutional sectors for nearly 30 years.

"We’ve been feeling the [manufacturing] slide for about eight years now," he said.

Today, his Smith-based company supplies filters, safety equipment, flame-retardant clothing and other items to the natural gas industry.

"We’re like a hardware store for them," he said. "It’s probably 75 percent of our business now."

In the past three years, Mr. Battista has increased his number of employees from 5 to 15, and his revenue from $1.5 million to $4 million.

Though he named his company "Sunnyside" with the hopes of capitalizing on solar energy in the 1980s, Mr. Battista said he has since become a believer in natural gas.

As for those who have doubted the impact Marcellus Shale has had on the local economy, Mr. Battista has a piece of advice.

"I would tell them to come talk to the 10 employees we just hired," said Mr. Battista, who continues looking for more employees for his growing business.(2)

The new money that comes into communities via lease and royalty payments—money that would not otherwise have been present—gets invested and spent. Farmers buy new equipment—supporting local equipment dealers. They deposit it at local banks—and those banks reinvest that money into other local businesses. They spend money on local attorneys and accountants, and they eat out more. They hire people to work on their farms. The list goes on.

This is new money—money that would not have otherwise found its way to these communities—goes to work creating jobs throughout the region.

Perhaps our schools need to teach a little more about economics and a little less about social activism.

(1) Pittsburgh Post-Gazette (Jul 3, 2011) – Shale drilling is big business, but for many, the effects are small

(2) Pittsburgh Post-Gazette (Jul 3, 2011) – Kings and queens of shale: Who’s benefitting from Marcellus Shale drilling?