Friday, July 15, 2011

A Marcellus Shale Experiment

So experiment is not quite the right word.   Let's call this a public exercise.  

A little while ago a kerfuffle erupted over some economic stats related to the job creation of Marcellus Shale related industries in Pennsylvania.   The state came out with a report that mentioned there were 72 thousand 'new hires' related to Marcellus activity.

Folks at the Keystone Research Center came out with a report that said wait a minute, the numbers don't quite add up that way .. 'new hires' is not the metric anyone uses for measuring job creation or economic impact.  At the very least you need to add in the routine job destruction to come up with the commonly used metric of net job creation. Otherwise you are just measuring the scale of churn in the labor market.

Then the Marcellus Shale Coalition responded with a press release that I guess has something to do with the topic at hand, though it's a bit hard to connect the dots. 

So what is the real answer? This may not deal with the techncial dispute over measurement of job creation, but still people need to think a lot harder than they have been about what the scale of economic impact has been of all this drilling going on across the state and causality more broadly.

So below is a graphic of annual 'new hires' in Pennsylvania, so state-wide data, in the industries sectors that should capture the direct impact of Marcellus Shale activity.  Yes, Marcellus like most other industires has indirect and induced effects as well... but it all starts with these direct jobs.

It is not a mistake; it is a bit Rawlsian and I have intentionally  left off the labels for the years on the horizontal axis.  Look at this picture and ponder 1) was there a qualitative change in trend, 2) if so, when does this chart suggest the new 'jolt' (as the state described it in the first link above) started up and 3) how big a change happened?  Was it big?  Really big?  Biggest thing ever? or maybe just some random noise? and 4) is any change in trend accelerating, decelerating or something else?


I'm going to leave that there for the moment.  I'm going to let that percolate for a few days and then come back with a slightly different graphic with some labels. I'd be cuious if anyone has any comments before then.  I'll back to it next week.

7 Comments:

Anonymous BrianTH said...

Well, I'd say:

(1) Looks like there was a change from a downward trend to an upward trend . . .

(2) . . . starting fifth bar from the right;

(3) Cumulatively it is a pretty big deal in relative terms--just eyeballing it, if the old trend had continued instead the last bar might have been roughly half the size;

(4) It could have accelerated in the last couple bars but I'd say there isn't enough data to tell yet, and wouldn't you want to do a log plot anyway?

Friday, July 15, 2011 7:40:00 AM  
Anonymous MH said...

Who are three men who've never been in my kitchen?

Friday, July 15, 2011 9:10:00 AM  
Blogger Jim Russell said...

I'm curious about PA peak employment in such industries. Overall, the graph looks like demand destruction thanks to the recession and then a bounce back.

There is surely a Marcellus spring in the numbers, most of which is out-of-state workers coming to PA for drilling (the job requires considerable experience).

What about white collar jobs? Do the numbers cover them as well?

Friday, July 15, 2011 9:42:00 AM  
Anonymous The Wiz said...

The key is that there are no years or dates given. I would guess that Chris is counting on all to think current time spans like 1998 to 2010, assuming that each bar equals one year. But knowing what a sneaky dude that Chris is, I'm gonna guess that the time period shown is actually 1970 to 1982, the last gas industry spike in our area.

I'm gonna take it a step further and surmise that Chris is trying to point out that O&G has boomed and busted before. That during the '70s, there was a huge boom in gas drilling due to the huge jump in crude oil prices. Many people thought it was the future....but that future fizzled. And it just might again.

If I am right, I'll will add some of my two cents then.

Friday, July 15, 2011 9:55:00 AM  
Blogger C. Briem said...

Sneaky? I would prefer inconvenient.

Friday, July 15, 2011 11:35:00 PM  
Anonymous Anonymous said...

What happened to the graph? I can't see it...

Saturday, July 16, 2011 9:22:00 PM  
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