The Ride Down Mount Parnassus
I guess I really need get back to my Marcellus Shale experiment from last week. Last week I had put up a chart, deliberately unlabeled in part with some data on employment. The horizontal/time axis was unlabeled because I had intentionally put the most recent data on the left. The purpose was to free the interpreter from some preconceptions and then see what they thought. I had said the data was the time series of ‘new hires’ in the industry which is a metric that had been in the news of late, but the data I pulled was inadvertently the total employment numbers which I then scaled incorrectly because I thought it was quarterly flow data. So I pulled the chart down to avoid confusing those who read it. At least I gave the social media gnomes on retainer something to read all weekend long.
Alas. Redone properly, and without the temporal inversion this is the trend in total employment statewide in NAICS code 21 industries (Mining, Quarrying, Oil and Gas Extraction), which should capture the direct employment resulting from new Marcellus Shale related activity.
The data there only has full year data through 2009 thus far, but other data available for 2010 and into 2011 indicate the trend in employment is picking up. The current employment in this time series may be over 30K by now, so a gain of 10K over the last couple of years. 10K is a lot of jobs no doubt, but how big we can debate. For a ballpark comparison it is probably on par with the net gain in jobs at UPMC alone over that time.
The numbers you read about are often higher. Economic impact analysis the study of all the indirect and induced impacts new investment and economic activity can have. For sure Marcellus has those additional impacts, just as new investment in most any industry does. So the bigger numbers are not fiction, but their meaning is not always made clear. The report today has an oft quoted, or will be oft-quoted number of 250 thousand jobs. That isn't an estimated impact now, but a potential (this time more clearly labeled as 'potential') total impact including all indirect and induced impacts.. The future is where this all becomes an interesting question as to what is real what is hype, a question that is being debated in a lot of places.
The 250K jobs projection is a really interesting number in a lot of untalked about ways. Even with the lingering employment recession inflating the unemployment rolls, the total unemployment count in PA right now is on the order of 470K and that includes a lot of folks in parts of the state with no palpable Marcellus Shale impact to date such as Philadelphia. Half of that state unemployment count alone comes from the Philadelphia MSA, even more if you include the Philadelphia exurban environs and then you probably then need to exclude unemployment in urban Pittsburgh since those folks have no means to get out to the jobs being created for the most part. So if that projection comes close to being true, where will those folks be coming from? That is one of the core questions in all of this. You would think there is a lot of permanent resident migration going on.. and unless they all get here at the last minute that flow must have started in earnest by now. Maybe that is going on, I dunno for now.... but the 'man-camps' don't count as migration into the state for the most part.
Like everything else, it's all a lot more complicated than that, and a lot more complicated than others want to make it seem. There was a good overview of some of the business dynamics in the nation's natural gas industry in Seeking Alpha just the other day. The biggest things people are really talking about is what is going to happen with the infrastructure for all of this, the pipelines and compressor stations that are going to be needed in ever larger numbers if. That and this issue of a refinery or 'cracker' to process the gas being produced here. Keep an eye on that.