Case Studies: Shale Drilling’s Mixed Legacy, New Jobs & Community Costs

The Multi-State Shale Research Collaborative set out to document the local impacts of shale gas drilling in Greene and Tioga counties, as well as in Carroll County, Ohio, and Wetzel County, West Virginia.  Click Here to view a summary and copies of the full case studies.

Greene, in the Southwest corner of Pennsylvania, and Tioga, along the Northern Tier bordering New York State, are both small rural communities that witnessed a dramatic growth in shale development in recent years.

“The impact of shale drilling in Greene and Tioga has been mixed,” said Sharon Ward, Director of the Pennsylvania Budget and Policy Center, a member of the shale collaborative. “Communities benefited through higher incomes and employment but paid a price, in terms of reduced quality of life, higher costs for police and emergency services, higher rents, and more crime.”

Both counties had many similar experiences after drilling expanded, including an influx of out-of-state workers and a climate in which companies operated without much local oversight. There were notable differences too, particularly as the industry shifted its focus from drilling for methane, or dry, gas in Tioga to more lucrative wet gas and shale oil in Greene and parts of Ohio and North Dakota.

“The story in Tioga is one of a boom and bust,” Ward said. “The community was largely unprepared for the sudden overwhelming presence of the industry, with few tools to manage or plan for growth and change. And then just as suddenly, the industry packed up and left town, taking many of the jobs with them.

“In Greene, we found a community that is no stranger to mineral extraction, with a history of coal mining and conventional gas drilling. While employment has increased, the county is now even more dependent on extractive industries, which could put the local economy at risk in the event of a slowdown.”

The Greene and Tioga case studies, along with those in Carroll County, Ohio, and Wetzel County, West Virginia, draw on publicly available data, press reports, and local interviews to identify both the benefits and the costs of drilling, and the ways in which these communities have been transformed as a result.

Below are the key findings from the Greene and Tioga case studies:

-- Leases, Signing Bonuses, and Royalties: Residents benefited from signing bonuses and royalties, but benefits have not been shared equally. A significant share of property in both counties is owned by out-of-state residents and businesses or by a handful of landowners.

-- Employment and Economic Benefits: Both Greene and Tioga reported growth in oil and gas drilling jobs, but overall shale-related employment is still a small share of total county employment. Greene County experienced the most significant growth in employment and a decline in unemployment, while the jobs and other economic benefits proved to be temporary in Tioga, and unemployment once again rose above the state average.

-- Housing: With the influx of out-of-state gas workers, both counties faced an increased demand for housing, making it less affordable. Greene, which faced a shortage of quality rental housing before the boom, was particularly hard hit. Both counties reported an increased demand for housing assistance and an increase in homelessness. Low-income families in Greene, unable to find affordable housing, were separated as children went into the foster care system.

-- Roads and Infrastructure: Drilling activity has increased truck traffic on roads that were not designed for heavy truckloads. This has caused greater wear and tear on the roads and increased motor vehicle accidents and road repair costs.

-- Crime: In both counties, we were able to document an increase in crime as drilling activity increased.

-- Health Care: Emergency room visits increased in both Greene and Tioga.

-- Education: School enrollments, for the most part, remained stable or continued to decline. The dropout rate grew in Greene, exceeding the state average, as some students left school to take high-paying jobs in industry. Both counties reported an increase in the need for special education services.

-- Government Revenues: Pennsylvania’s tax structure provides little direct revenue to local governments from this economic activity. The impact fee authorized in Act 13 of 2012 has provided them with new resources to mitigate some impacts of drilling, but in the first year most local governments put the funding into reserves.

Both case studies recommend that communities with increased drilling create local oil and gas taskforces to coordinate discussions between government agencies, local stakeholders, and companies, and that local landowners establish a landowners group to help each other navigate the growth of the industry.

The studies also recommend the state replace its local impact fee with a severance tax and that more investments be made in fixing and policing the roads and making affordable housing more available in hard-hit communities.

“Our studies show that there are localized benefits from gas development, and substantial costs, for low-income residents, through increased crime and in costs to local governments,” Ward said. “Communities potentially facing new gas development would do well to greet the development with as much caution as enthusiasm, and to be prepared as much for the bust as the boom.”

The Multi-State Shale Research Collaborative brings together independent, nonpartisan research and policy organizations in five states to monitor employment trends and the community impacts of energy extraction in the Marcellus and Utica Shale.

Member organizations include the Fiscal Policy Institute of New York, Policy Matters Ohio, Keystone Research Center/Pennsylvania Budget and Policy Center, Commonwealth Institute for Fiscal Analysis in Virginia, and West Virginia Center on Budget and Policy.

Copies of the full case studies are available online.

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