Safe, job-creating American shale development continues to be a win-win for Pennsylvania families, our communities and the environment as well as our wildlife population. And as record-breaking amounts of clean-burning natural gas are responsibly produced here at home – led by the Marcellus – our economy is growing stronger, gaining international attention and interest.
This from the Financial Times today under the headline “America’s Economy is Cooking on Shale”:
As the IMF points out, the revolution in the U.S. has caused natural gas prices to fall sharply there, even as they have risen in Europe and Japan. … Earlier this year a paper released by the U.S. Federal Reserve calculated that these price variations had boosted the output of American manufacturers by 3 per cent since 2006, while raising investment by 10 percent and jobs by 2 per cent; the impact on specific energy-linked industries was far higher. However, the IMF’s research suggests that the difference in energy costs has boosted U.S. manufacturing exports by 6 percent, and it argues that each 10 percent fall in the relative price of natural gas in the U.S. will boost U.S. industrial production by a further 0.7 percent, compared to that of Europe.
At first glance, this 0.7 per cent differential may not sound important. But if this gap is maintained over several years, the impact for competitiveness and output will be significant. It is not just the productivity statistics that matter; what the shale gas revolution has also done is create something that the IMF report does not mention: a transatlantic gap in psychology. For many business leaders in America today, shale gas has not merely lowered energy costs; it has also fostered new respect for technological innovation. Think about it. A decade ago it seemed almost impossible to imagine that America might ever break its dependence on Middle East oil imports, let alone see some rust-belt industries become competitive.
And writing in the Wilkes-Barre Times Leader this week, MSC president Dave Spigelmyer highlights these clear benefits:
Thanks to responsible shale development, our nation has shifted from a position of scarcity, weakness and compounding dependence on unstable regions of the world to meet our growing energy needs to an outlook that’s grounded in abundance, enhanced security as well as geopolitical and economic strength.
And President Obama once again underscored these benefits in a recent speech at Northwestern University, stating: “Today, the number-one oil and gas producer in the world is no longer Russia or Saudi Arabia. It’s America.” The president added: “Meanwhile, our 100-year supply of natural gas is a big factor in drawing jobs back to our shores. Many are in manufacturing – which produce the quintessential middle-class job.”
Pennsylvanians recognize these benefits – in the form of more jobs, many for local unions, and economic opportunity; lower energy bills for families, schools and hospitals; a renewed manufacturing base; cleaner air; as well as much-needed tax and fee revenue.
Here’s what else they’re saying about America’s historic energy revolution:
SHALE STRENGTHENS AMERICAN FAMILIES, MANUFACTURING
- Chevron CEO John Watson: “We’ve Rewritten the U.S. Energy Story”: Perhaps the most dramatic changes have been in the U.S. oil and natural gas sector, where we’ve launched an energy revolution, fueled by technology and innovation, that’s allowing us to produce more from oil and gas fields and develop new geographic frontiers. In the last decade, we’ve rewritten the U.S. energy story — from one focused on scarcity to one focused on abundance. America is now the second largest energy producer in the world. Energy has kept our industries competitive, promoted rising living standards, and bolstered consumer confidence and pocketbooks, while addressing the country’s challenges in job creation and addressing the growing federal budget deficit. (CNBC op-ed, 10/6/14)
- “IMF Report: U.S. Natural Gas Production Has Helped Stabilize Global Energy Prices”: Fracking in shale deposits has made the U.S. the world’s leader in natural gas production and helped lower the cost of gas and energy prices for Americans, while prices in Asia and the European Union have risen. In a report, the International Monetary Fund laid out the global implications of the U.S. shale boom. In 2000, shale gas accounted for merely 1% of U.S. natural gas production. Today, shale gas production now accounts for about half of the total U.S. natural gas production, according to the IMF. … The IMF reports that the shale revolution has given the U.S. an advantage in the natural gas arena, allowing it to be more competitive. (Wall Street Journal, 10/7/14)
- Council on Foreign Relations Report Touts U.S. Shale Benefits: Companies that supply this burgeoning sector benefit significantly, including those that provide materials for oil and gas wells and those that house, feed, and clothe the expanding workforce. More broadly, the lower cost of natural gas is changing the financial calculations for many companies that use natural gas as a raw material or source of low-cost energy. Energy- and natural gas–intensive industries such as petrochemicals, cement, glass, fertilizer, aluminum, plastics, and steel—composing some 7 percent of the U.S. industrial sector—benefit the most. The energy cost advantage, coupled with factors such as wages, productivity, and exchange rates, has reduced overall U.S. manufacturing costs, which are now notably lower than almost all major competitors. … Lower natural gas prices are passed along to consumers as they heat their homes and water, turn on the lights, and purchase everyday goods. IHS calculates that the average U.S. household saved some $1,200 in 2012 for a total of $163 billion in annual consumer gains. There will be further savings in the future. (CFR report, 10/2/14)
- Gov. Terry McAuliffe: “Fracking is Revolutionizing Manufacturing in the U.S.”: Impressed by the riches created by shale gas in some U.S. Northeast states, Virginia is working to build a manufacturing hub and create thousands of jobs from the cheap fuel that will soon flow into the state, Governor Terry McAuliffe said. … Five years ago, the Marcellus produced barely 2 billion cubic feet of gas per day and the Utica less than 0.2 bcfd. Now the Marcellus pumps 16 bcfd, a fifth of America’s gas, and the Utica turns out about 1.5 bcfd. … “Fracking is revolutionizing manufacturing in the United States. Businesses are bringing manufacturing jobs back from China and elsewhere overseas because cheap energy is giving us a competitive edge,” McAuliffe said. “It will make us energy independent.” (Reuters, 10/8/14)
- “Cheap Natural Gas Lifts U.S. Manufacturing”: Cheap natural gas has delivered a significant boost to U.S. manufacturing exports, the International Monetary Fund has found. Advances in shale rock drilling have led to a sharp rebound in U.S. gas production, driving prices in the U.S. to a steep discount to markets in Europe and Asia. … The price gap has led to a 6 percent average increase in U.S. manufactured product exports, the IMF wrote in its twice-yearly World Economic Outlook. “The lower natural gas price in the United States, which is likely to persist, has had a noticeable effect on U.S. energy-intensive manufacturing exports,” the IMF report said. Lower prices for natural gas favor energy- and gas-intensive industries, such as steelmaking, oil refining, and nitrogen fertilizer production. (Financial Times, 10/7/14)
LOCAL BENEFITS THREATENED BY NEW ENERGY TAXES
- New Energy Taxes Would Hurt Local Communities: Washington Co. commissioner Harlen Shober has seen the impact of the [shale] industry on the county’s economy. … “Act 13 is really something that’s benefitted the county and local communities, bringing money back,” added Shober. “That money is going into roads. They wouldn’t have that money to spend without Act 13.” Shober said all 67 municipalities in Washington County receive some impact fee funds. … “Farms that were for sale that could not be farmed are now being farmed, so we’re saving green space,” Shober said. “As far as the local economy goes, people are buying tractors, equipment, etc. There’s a trickle down affect.” Shober said dealerships are selling more trucks, and restaurants and hotels are crowded. … Shober and Protin believe if the state enacts a severance tax, little of that money would go to local communities. (Tribune-Review, 10/8/14)
- Official: Job-Crushing Energy Taxes Put Local “Revenue at Stake”: Marcellus gas wells bring amazing amounts of revenue directly to municipalities via the current Act 13 impact fee. You may have noticed roads recently resurfaced and new equipment badly needed by local municipalities. These items were not affordable until the impact fees were collected from the gas company operators. With the upcoming gubernatorial elections, that could change. [Tom] Wolf plans to either add a severance tax on top of the impact fee or eliminate the impact fee and replace it with a severance tax. If he does that, the taxes collected from the gas companies will not go to municipalities. Instead, that money will go into the state’s general fund. In addition, several gas companies have announced that they will pull out of Pennsylvania if Wolf, as governor, proceeds with his additional taxes. I think we all know what that could mean for employment in the area. … Voters should put aside political affiliations and vote for what is best for their towns and counties. The proposed severance tax will literally stop all progress in West Pike Run Township and in other municipalities. (Tribune-Review letter, 10/8/14)
- Communities, Voters “Skeptical of a” New Energy Tax: Some Pennsylvania residents remain skeptical of a severance tax on fracking, especially because it might eliminate the current impact-fee system, which has brought in more than $200 million a year. Jodi Noble, township manager for Chartiers Township, is passionate about the importance of impact fees. … Chartiers Township in Washington County has received $1.9 million from these fees over the three collection years. Noble said the fees helped fund two prominent projects in her township. Allison Hollow Road, a major collector road in the area, is being reconstructed. It will cost $1.8 million, and the township has already paid $1 million from impact-fee money. … But the township is mindful the money could disappear if a severance tax is enacted. … In addition to fixing potholes and adding guard rails, the work is correcting water drainage problems. Richard Myers lives along the road and experienced the problem up-close. Water would often pool on the road near the edge of his driveway, and in the winter it would freeze. One year, a younger driver slipped on the ice and slid right into his yard, Myers said. The road has now been graded properly. Myers said he’s sure that this single aspect of the project could save a life. A second project of the township’s was helping pay for a tanker and a pumper for the fire department. … Some residents and local administrators are skeptical about a severance tax because, the way [Act 13] is currently written, a severance tax would automatically eliminate the impact-fee system. (Watchdog.org, 10/10/14)
- Will be in a “Competitive Disadvantage” with New Energy Taxes: Imposing more taxes on record amounts of natural gas from Pennsylvania wells would harm an industry squeezed by low prices and insufficient infrastructure, Range Resources Corp. CEO Jeffrey Ventura said. … An extraction tax like that proposed by gubernatorial front-runner Tom Wolf, on top of the per-well fee they’re paying to the state, could push big companies to other shale plays, Ventura said. “I think you’ll see companies like Range or some of the smaller people stay pretty active, but at the end of the day, it clearly will impact the play overall,” he said. … “Until that infrastructure works itself out and demand catches up with supply, there’s a huge negative basis,” he said, noting that gas that fetches $4 per thousand cubic feet at major pipeline points gets only $2 coming out of Pennsylvania. Adding taxes would put producers here at a competitive disadvantage, Ventura said. It threatens money that drillers pay to communities, including a combined $630 million in per-well impact fees over three years and $1 billion on roads over the past decade. (Tribune-Review, 10/6/14)