Stories dot the media describing shale development as booms that have transformed the economies of North Dakota and Pennsylvania. That broad portrait gets badly wrong the impacts of shale development on the economies of the two states.
Simply put, Pennsylvania is not North Dakota.
North Dakota has a population of 699,628, while Pennsylvania’s is 12,763,536 or about 18 times larger.
North Dakota’s civilian labour force 392,000, with just 12,700 unemployed. Pennsylvania’s labour force is 6,558,700, with 516,700 unemployed.
The gas boom has created about 100,000 jobs in Pennsylvania, if one counts “core,” other direct, and indirect jobs created by shale gas production in Pennsylvania. Creating 100,000 jobs in Pennsylvania and North Dakota produce very different impacts on the two states.
In North Dakota, 100,000 new jobs would mean a job for 1 of every 7 North Dakotans and 1 out of every 4 people in North Dakota’s labour force. That many new jobs in a small population changes the entire state’s economy.
In Pennsylvania, 100,000 new jobs are much needed and very welcome, but they are not enough to create broad prosperity. Here 100,000 new jobs means 1 out of every 127 Pennsylvanians has a job thanks to the gas industry. Or 1 out of every 65 Pennsylvanians in the civilian labour force has a job as a result of gas production. Those numbers are significant. They even transform the economies of about 7 rural counties where gas drilling is concentrated.
But Pennsylvania is not North Dakota. In North Dakota, its unemployment rate is about 4 full percentage points below the national unemployment rate.
In Pennsylvania, our unemployment rate for the last 4 months has been above the national unemployment rate and that is a change for the worse. From 2003 to September 2011, Pennsylvania’s unemployment rate had been consistently below the national unemployment rate.
There is one more way that the shale booms in North Dakota and Pennsylvania are not the same. North Dakota has an oil boom, and Pennsylvania has a gas boom. Indeed, North Dakota horrendously allows massive flaring of enormous quantities of natural gas that is co-produced with the oil.
Oil is priced in a global market, but gas is priced regionally. Today oil is about 27 times more expensive or valuable than natural gas.
Pennsylvania is not North Dakota.
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