Broome County Releases Natural Gas Economic Impact Study
Preliminary report released to legislature and media
(Binghamton, NY) If done right, done safely and done soon, Broome County could see an economic impact in the billions of dollars over the next ten years as a result of the Marcellus Shale natural gas play. These are the findings of a Broome County Government commissioned Economic Impact Study.
“We have been talking about the potential economic boon this area could experience as a result of developing our natural gas resources, however, up until this point, we have not been able to quantify those impacts,” said Executive Fiala. “With this study, we believe strongly that if balanced with the proper attention to environmental protections, the development of the Marcellus Shale can provide a tremendous and much needed economic boost to our local economy.”
The study was conducted by Bernard L. Weinstein, Ph.D. and Terry L. Clower, Ph.D., Professors of Applied Economics at the University of North Texas. The pair was commissioned to conduct the study because of their background and experience in conducting a similar Economic Impact Study for the area impacted by the Barnett Shale in Texas. The very first sentence of the report highlights the tremendous potential of the entire Marcellus Shale:
The Marcellus Shale in the Appalachian Region of the United States is fast becoming the hottest natural gas drilling play in the nation. Indeed, some experts believe the production in the Marcellus Shale could eventually outstrip that of the Barnett Shale in north central Texas, currently the largest producer of natural gas in the continental US. This is not an unreasonable assumption, considering that the Marcellus formation is 65 million acres in size compared to a mere 3 million for Barnett.
The report goes on to detail some pretty significant potential economic impacts on the Greater Binghamton Region:
Economic and Fiscal Impacts of Gas Well Drilling Activities
In Broome County, New York Over 10 Years
Description | Impact 2,000 Wells | Impact 4,000 Wells |
Total Spending | $ 7,000,000,000 | $ 14,000,000,000 |
Total Economic Activity | $ 7,648,652,000 | $ 15,297,304,000 |
Total Wages, Salaries, Benefits (labor income) | $ 396,436,000 | $ 792,872,000 |
Total Employment (person years) | 8,136 | 16,272 |
Total Property Income* | $ 605,676,000 | $ 1,211,352,000 |
State Taxes+ | $ 22,240,000 | $ 44,480,000 |
Local Taxes+ | $ 20,528,000 | $ 41,056,000 |
*Includes royalties, rents, dividends, and corporate profits. + Includes sales, excise, property taxes, fees, and licenses.
The previous table outlines direct impacts of natural gas drilling based on 2,000 and 4,000 wells respectively(these are not presumptions of the actual number of wells, it is simply a baseline from which to determine levels of economic impact). It goes on to describe an overall economic impact that will be the result of economic activity related to the development of the Marcellus Shale in the Greater Binghamton region:
In Broome County, New York
Average Annual Impact Over a 10-Year Period
Description | Impact 2,000 Wells | Impact 4,000 Wells |
Total Spending | $ 1,853,785,000 | $ 3,707,570,000 |
Total Economic Activity | $ 2,060,198,000 | $ 4,120,397,000 |
Total Wages, Salaries, Benefits (labor income) | $ 156,758,000 | $ 313,516,000 |
Total Employment (person years) | 2,190 | 4,380 |
Total Property Income* | $ 119,622,000 | $ 238,640,000 |
State Taxes+ | $ 13,622,000 | $ 27,244,000 |
Local Taxes+ | $ 12,574,000 | $ 25,149,000 |
* Includes royalties, rents, dividends, and corporate profits. + Includes sales, excise, property taxes, fees, and licenses.
However, the report also cautions that all of these impacts are predicated on New York State allowing natural gas horizontal drilling in a timely manner:
Of course, all of these economic and fiscal benefit calculations are predicated on the assumption that the State of New York creates and maintains a supportive regulatory and tax climate toward the natural gas drilling and production industry. Policy makers must keep in mind that New York is competing with many other states in the Marcellus Shale for investment in this infant industry. Excessive regulatory or fiscal burdens could significantly limit New York’s prospects. In particular, the state should avoid the temptation to levy a severance tax on natural gas production as this would only serve to drive the industry to Pennsylvania or another state.
The entire preliminary economic impact report is available in hard copy from the Broome County Executive’s Office or by clicking here. The study must be reviewed by legislators before being officially accepted and may be edited before the final economic impact report is issued.
Posted: 7/28/2009 8:47 am
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