Fracking and Politics in Pennsylvania: Assessing the Economic Impact of the Shale Revolution in Pennsylvania
A couple of things. First, Pennsylvania is a large and economically diverse state. Philadelphia is the sixth-largest city in the nation by population, and other cities such as Pittsburgh, Allentown, and Harrisburg thrive on information technology, healthcare, financial services, and other economic sectors. By contrast, most natural gas production in Pennsylvania occurs in rural communities such as Bradford, Greene, Susquehanna, and Washington Counties. In those places, the industry plays a larger role in the local economy, but statewide, other sectors dwarf the oil and gas industry.
Second, most of the largest operators in Pennsylvania are headquartered in other states. Of the five largest natural gas producers in Pennsylvania (EQT, Chesapeake Energy, Coterra Energy, Range Resources, and Southwestern Energy), just one (EQT) is based in the state. As a result, the lion’s share of profits and many of the best-paying corporate positions wind up in Houston, Fort Worth, or Oklahoma City.
Third, natural gas prices in Pennsylvania have been depressed by at least two factors. First, a lack of pipeline infrastructure has made it difficult for operators to access markets in the Northeast and elsewhere, putting downward pressure on the prices received by Marcellus producers. Second, booming oil production in the Permian Basin has brought with it a wave of associated natural gas, pushing prices down for natural gas across the United States. This price change has outsized effects in the Marcellus, where “dry” gas (i.e., methane) dominates, and relatively few wells produce substantial quantities of higher-value liquids.
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