WEBVTT - Frackalachia and the Great Fracking Jobs Myth 0:00:00.080 --> 0:00:02.360 If you live in the region, you only have to 0:00:02.400 --> 0:00:05.320 walk through the downtowns to see what I'm saying. Whether 0:00:05.360 --> 0:00:11.799 it's you know, Steubenville, Ohio, Balero, Ohio, Wheeling, West Virginia, Waynesburg, Pennsylvania, 0:00:12.320 --> 0:00:16.120 all of those downtowns are hollowed out shells of what 0:00:16.200 --> 0:00:16.840 they once were. 0:00:31.200 --> 0:00:34.720 Hey, there, this is drilled. I'm Amy Westervelt and that 0:00:34.920 --> 0:00:39.240 was Sean O'Leary from the Ohio River Valley Institute. O'Leary 0:00:39.440 --> 0:00:44.080 is a native West Virginian who's watched firsthand what first 0:00:44.200 --> 0:00:48.519 coal and then gas did to his community. He doesn't 0:00:48.600 --> 0:00:53.080 live in West Virginia anymore, and that has become a 0:00:53.240 --> 0:00:57.840 topic of criticism from people who did not appreciate some 0:00:57.920 --> 0:01:02.000 of his recent work. Last month, a leary and the 0:01:02.120 --> 0:01:05.440 organization he works for released a report that really made 0:01:05.480 --> 0:01:07.800 the oil and gas guys mad. It takes on a 0:01:07.840 --> 0:01:13.280 simple question, did the fracking boom actually deliver all those 0:01:13.319 --> 0:01:17.040 economic benefits we've heard the industry talk so much about. 0:01:17.480 --> 0:01:21.440 The report specifically looks at the region O'Leary has dubbed Frakalacia, 0:01:21.840 --> 0:01:26.080 encompassing parts of the Ohio River Valley in Ohio, Pennsylvania, 0:01:26.120 --> 0:01:30.840 and West Virginia. As you might recall from every election 0:01:31.000 --> 0:01:34.680 cycle in the last decade, whenever people start talking about 0:01:34.720 --> 0:01:37.560 the environmental impacts of fracking or the potential of a 0:01:37.600 --> 0:01:41.319 fracking ban, the industry has the same response. 0:01:41.640 --> 0:01:44.160 The amount of jobs that are created by this technology 0:01:44.160 --> 0:01:47.360 cannot be overstated. The United States Chamber of Commerce, for instance, 0:01:47.400 --> 0:01:50.960 tells me doing a way with this one technology would 0:01:51.040 --> 0:01:53.920 lead to the loss of nearly nineteen million jobs here 0:01:53.960 --> 0:01:54.840 in the United States. 0:01:55.080 --> 0:01:57.720 The US is now the leading producer in the world 0:01:57.880 --> 0:02:01.160 of natural gas and of oil, and that has powered 0:02:01.440 --> 0:02:03.280 benefits in our economy. 0:02:03.080 --> 0:02:06.120 Tens of thousands of jobs paying an average salary of 0:02:06.160 --> 0:02:09.880 fifty thousand dollars. That's what the Ohio Shale Coalition says 0:02:10.160 --> 0:02:11.239 is coming to Ohio. 0:02:11.480 --> 0:02:15.760 But O'Leary and his colleagues analyzed economic data from before, during, 0:02:15.800 --> 0:02:18.880 and after the fracking boom in the Ohio River Valley 0:02:19.080 --> 0:02:20.800 and found something else. 0:02:21.520 --> 0:02:27.960 Measures of local economic prosperity, starting with jobs, also personal income, 0:02:28.040 --> 0:02:32.160 and finally population were underwhelming to the point of being 0:02:32.240 --> 0:02:33.079 non existence. 0:02:33.520 --> 0:02:37.840 Oleary joined me to explain the report, the research behind it, 0:02:37.919 --> 0:02:40.400 and what it means for the region and for other 0:02:40.440 --> 0:02:44.400 oil and gas regions. That conversation coming up right after 0:02:44.480 --> 0:02:52.239 this quick breaking I'd love to have you just kind 0:02:52.280 --> 0:02:54.600 of give people a little bit of the lay of 0:02:54.639 --> 0:02:56.920 the land. You know, what is this report that you 0:02:57.080 --> 0:03:00.520 just wrote and what were the key findings from it? 0:03:01.639 --> 0:03:06.120 Yeah, the report was an analysis of the economic impacts 0:03:06.720 --> 0:03:11.639 of the natural gas fracking boom in Appalachia on particularly 0:03:11.840 --> 0:03:15.160 the counties in the region, the twenty two counties in 0:03:15.200 --> 0:03:19.200 the region from which over ninety percent of the gas 0:03:19.240 --> 0:03:23.720 is being produced. Because there have, as anyone who's paid attention, 0:03:23.960 --> 0:03:29.160 for instance, in the recent presidential campaign knows a number 0:03:29.200 --> 0:03:33.840 of claims about a huge number of jobs associated with fracking, 0:03:34.560 --> 0:03:37.920 and so we went in specifically for the purpose to see, 0:03:38.400 --> 0:03:42.200 in fact, how many jobs has fracking created and what 0:03:42.280 --> 0:03:46.000 other economic benefits has fracking helped produce in those counties, 0:03:46.840 --> 0:03:51.520 and what the report discovered. What we found was that 0:03:51.760 --> 0:03:57.360 despite an immense increase in economic output is measured by GDP, 0:03:58.560 --> 0:04:03.400 which was roughly three times the rate of growth in 0:04:03.440 --> 0:04:06.880 the American economy as a whole, despite that immense spike 0:04:06.920 --> 0:04:14.200 in productivity, the measures of local economic prosperity, starting with jobs, 0:04:15.240 --> 0:04:20.200 also personal income, and finally population were underwhelming to the 0:04:20.240 --> 0:04:23.520 point of being non existence. And so the conclusion the 0:04:23.560 --> 0:04:29.080 report came to was that there's virtually no correlation between 0:04:29.320 --> 0:04:34.520 economic growth as driven by the natural gas industry and 0:04:35.320 --> 0:04:40.920 actual prosperity positive economic outcomes on the ground. And yes, 0:04:41.000 --> 0:04:43.560 that has stirred up quite a bit of controversy in 0:04:43.600 --> 0:04:44.040 the region. 0:04:44.400 --> 0:04:48.880 That's super interesting. The big cell for fracking forever has 0:04:49.000 --> 0:04:52.880 been this idea that the jobs it creates outweighs the 0:04:53.040 --> 0:04:56.239 impacts that it might have on the environment, or on water, 0:04:56.640 --> 0:05:00.560 or on communities and things like that. What are you 0:05:00.680 --> 0:05:05.039 hearing from, especially the people who have been pushing that 0:05:05.160 --> 0:05:08.400 idea both kind of you know, oil and gas executives 0:05:08.440 --> 0:05:10.880 and politicians in some states. 0:05:11.200 --> 0:05:19.520 Well, when they're not calling me names. Basically, the reactions 0:05:19.560 --> 0:05:25.000 so far, you know, have been pretty fervent. A couple 0:05:25.000 --> 0:05:29.640 of congressmen have issued press releases and others basically attempting 0:05:29.720 --> 0:05:33.120 to refute the findings of the study. The problem is 0:05:33.320 --> 0:05:37.039 that none of them yet have actually contested any of 0:05:37.040 --> 0:05:41.000 the quantitative findings in the study. Instead, what they've done 0:05:41.320 --> 0:05:46.280 is point to other statistics in an effort to basically 0:05:46.560 --> 0:05:52.040 offset what the study found. And so, for instance, there 0:05:51.160 --> 0:05:55.159 are probably the three statistics that they point to most 0:05:55.200 --> 0:06:00.520 often are that the unemployment rate in much of the 0:06:00.560 --> 0:06:04.400 region that we've been talking about has declined significantly in 0:06:04.440 --> 0:06:08.520 the last decade. They also point to the level of 0:06:08.560 --> 0:06:13.200 investment that the fracking industry has made in the region, 0:06:13.800 --> 0:06:19.760 the billions of dollars of investment. And finally, they point 0:06:19.839 --> 0:06:23.800 to what they say is the total number of jobs 0:06:23.839 --> 0:06:27.320 provided in the states of Ohio, Pennsylvania, and West Virginia, 0:06:29.120 --> 0:06:32.599 those who are both jobs that are directly attributable to 0:06:32.680 --> 0:06:39.040 the industry and also indirect and induced jobs, which they 0:06:39.080 --> 0:06:43.800 say in those states number in the hundreds of thousands. That, however, 0:06:43.880 --> 0:06:47.200 has been even before our report, a subject of considerable 0:06:47.279 --> 0:06:51.680 contention in the area for quite some time. The problem 0:06:51.760 --> 0:06:56.440 with the statistics that they cite, in addition to the 0:06:56.600 --> 0:07:00.640 pre existing dispute about the total number of jobs, is 0:07:01.120 --> 0:07:06.520 that the unemployment rate figures that they cite, and also 0:07:06.920 --> 0:07:12.320 the investment dollar figures that they cite, are immensely misleading. 0:07:12.640 --> 0:07:16.320 In a sense, you really shouldn't have needed this report 0:07:16.560 --> 0:07:20.760 to understand that there is no huge boom in jobs 0:07:20.840 --> 0:07:25.040 or economic revival going on in northeastern Pennsylvania or in 0:07:25.080 --> 0:07:27.880 the greater Ohio Valley, because all you have to do 0:07:28.000 --> 0:07:32.880 is walk through the downtowns and you see it. The 0:07:32.920 --> 0:07:37.160 downtowns there are greatly reduced from what they were, certainly 0:07:37.200 --> 0:07:39.400 at the time that I was growing up years ago. 0:07:40.520 --> 0:07:43.280 And it's really sad to see for those of us 0:07:43.360 --> 0:07:47.400 who are from the area and who have hopes that 0:07:47.480 --> 0:07:51.440 the area can be revived and can prosper again. And 0:07:52.080 --> 0:07:57.840 I despair that so many policymakers and leaders in the 0:07:57.880 --> 0:08:01.720 area are continuing to go down the line of pursuing 0:08:02.400 --> 0:08:06.840 the petrochemical industry and possible fuel industries as means to 0:08:06.880 --> 0:08:07.360 get there. 0:08:08.240 --> 0:08:12.720 Yeah, I wanted to ask you about the petrochemical build out. 0:08:12.800 --> 0:08:16.680 I saw that that release today about the fact that, 0:08:16.960 --> 0:08:20.200 you know, one of the major companies looking at building 0:08:20.200 --> 0:08:24.720 an ethane cracker in this region is delaying once again, 0:08:24.920 --> 0:08:27.800 and you know, talking about needing to make it makes 0:08:27.840 --> 0:08:32.400 sense economically. But I feel like you're also seeing this 0:08:32.480 --> 0:08:37.080 repeat right of the same kind of overblown jobs numbers thing, 0:08:37.360 --> 0:08:39.760 when I don't know, it seems to me that they 0:08:39.880 --> 0:08:44.240 often include temporary jobs in that and not and are 0:08:45.040 --> 0:08:48.240 misleading about how many permanent jobs any of these things create. 0:08:48.720 --> 0:08:50.760 Well, and that's why I mean, one of the points 0:08:50.800 --> 0:08:56.760 that I'm making is that the report I said in 0:08:56.760 --> 0:09:00.400 an interview that there's not much math going on here, 0:09:01.559 --> 0:09:05.160 which is a statement for which I've since been dinged 0:09:05.200 --> 0:09:07.679 by those who won't approve of the report. 0:09:07.840 --> 0:09:11.120 But I like to just say the math math in Yeah. 0:09:11.480 --> 0:09:13.840 But the point that I was trying to make was 0:09:14.480 --> 0:09:20.400 that the report that we issued is not the product 0:09:20.440 --> 0:09:26.840 of an inferential model. We aren't predicting, you know, we 0:09:26.880 --> 0:09:32.040 aren't using statistical techniques to predict what has happened or 0:09:32.120 --> 0:09:36.280 may happen. We literally just went to the numbers as 0:09:36.600 --> 0:09:40.360 reported to the quarterly senses of employment and wages. These 0:09:40.400 --> 0:09:43.800 are the numbers. And for that reason, it makes the 0:09:43.840 --> 0:09:48.719 report pretty difficult to criticize because there aren't any assumptions 0:09:48.760 --> 0:09:52.240 being made. There aren't any inferences being made. It's simply 0:09:52.280 --> 0:09:55.719 reporting the facts. Now, the you know, the question the 0:09:55.800 --> 0:09:58.360 challenge for the industry is, Okay, well, how do we 0:09:59.000 --> 0:10:02.080 how do we counter that? And so, for instance, you know, 0:10:02.200 --> 0:10:07.520 they have been saying they've pointed to the unemployment rate 0:10:07.559 --> 0:10:11.720 in particular, which has in fact gone down, And in 0:10:11.800 --> 0:10:14.320 pointing to the unemployment rate, they usually start with the 0:10:14.360 --> 0:10:20.360 year twenty and ten, which is a couple years after 0:10:20.480 --> 0:10:23.520 the fracking booms started in the region, at least in 0:10:23.600 --> 0:10:26.880 most parts of the region. But it also happens to 0:10:26.920 --> 0:10:29.760 be the bottom of the Great Recession in terms of 0:10:29.800 --> 0:10:34.760 employment and the unemployment rate in the US nationally, and 0:10:35.520 --> 0:10:38.599 so that, you know, puts them somewhat at an advantage 0:10:38.600 --> 0:10:40.960 with that number. But there's a more insidious thing that 0:10:40.960 --> 0:10:44.040 they're doing and citing that number, which is that there 0:10:44.040 --> 0:10:46.959 are two ways that you can make your unemployment rate 0:10:47.000 --> 0:10:50.360 go down. There's the good way, and that is you 0:10:50.400 --> 0:10:53.480 can add more jobs to your economy. But there's also 0:10:53.559 --> 0:10:57.360 a bad way, and that is you can reduce the denominator, 0:10:57.840 --> 0:11:01.280 you can get rid of workers, can lose workers from 0:11:01.280 --> 0:11:06.080 your economy even faster than you lose jobs, in which 0:11:06.120 --> 0:11:09.080 case your unemployment rate will go down as well. And 0:11:09.160 --> 0:11:11.880 that the latter is what has happened in this region. 0:11:12.280 --> 0:11:15.360 And so even though they do have a declining unemployment rate, 0:11:15.640 --> 0:11:19.920 it's not because they've added jobs. It's because they've lost workers. 0:11:20.520 --> 0:11:23.400 What does that mean when you say they've lost workers. 0:11:23.720 --> 0:11:25.880 People have moved out of the region or dropped out 0:11:25.920 --> 0:11:29.760 of the labor pool. When the unemployment rate, you know, 0:11:29.800 --> 0:11:32.840 when we hear the unemployment rate on a monthly basis 0:11:33.240 --> 0:11:36.920 announced from the Bureau of Labor Statistics. The unemployment rate 0:11:37.080 --> 0:11:40.080 is literally the number of people who are in the 0:11:40.200 --> 0:11:44.640 job market and without a job, divided by the total 0:11:44.720 --> 0:11:49.440 number of people in the job market who The people 0:11:49.440 --> 0:11:51.839 who are excluded from that are people who are not 0:11:51.960 --> 0:11:55.439 looking for jobs. And that's why occasionally you'll hear reports 0:11:55.559 --> 0:12:00.400 about the workforce shrinking or declining, and in this case, 0:12:00.440 --> 0:12:03.840 we're talking about an area in which the workforce has 0:12:04.120 --> 0:12:09.360 shrunk even faster than the number of jobs has So 0:12:09.400 --> 0:12:11.960 it's really a case of addition by subtraction. 0:12:12.320 --> 0:12:15.040 What kind of positive attention have you gotten? 0:12:15.520 --> 0:12:19.200 Well, positive attention, and there has been quite a lot, 0:12:19.360 --> 0:12:24.400 because I don't know that it comes through to folks 0:12:24.480 --> 0:12:28.079 who live outside the region, but it would be difficult 0:12:28.160 --> 0:12:33.280 to exaggerate just how ambivalent people in the region are 0:12:33.320 --> 0:12:36.960 about fracking and frankly, how opposed to it many of 0:12:37.000 --> 0:12:40.920 them are. And from that sector, we're getting a lot 0:12:40.960 --> 0:12:45.640 of people who are basically responding with thank god, I 0:12:45.760 --> 0:12:49.680 knew it, and I'm glad someone is finally saying it, 0:12:49.800 --> 0:12:52.640 because as I said before, if you live in the region, 0:12:53.040 --> 0:12:55.679 you only have to walk through the downtowns to see 0:12:55.679 --> 0:12:59.720 what I'm saying, whether it's you know, Steubenville, Ohio, Balero, Ohio, 0:13:00.040 --> 0:13:05.240 yel In West Virginia, Waynesburg, Pennsylvania, all of those downtowns 0:13:05.720 --> 0:13:09.440 are hollowed out shells of what they once were, and 0:13:09.520 --> 0:13:15.000 people know that, and so for them, they at least 0:13:15.000 --> 0:13:19.240 feel validated by this because there is another hope out there, 0:13:19.280 --> 0:13:23.760 and the hope is that you know, policymakers, political leaders 0:13:23.800 --> 0:13:29.080 in the area well hopefully begin to recognize that the 0:13:29.120 --> 0:13:33.520 fossil fuel industry is a pretty lousy foundation upon which 0:13:33.600 --> 0:13:37.640 to try to build economic growth and prosperity, and that 0:13:38.000 --> 0:13:42.640 this area, above perhaps all areas in the country, desperately 0:13:42.760 --> 0:13:46.160 needs to turn its attention to the energy transition and 0:13:46.200 --> 0:13:49.400 to the opportunities that are offered by the transition, which 0:13:49.440 --> 0:13:50.400 are considerable. 0:13:50.720 --> 0:13:52.800 Yeah, could you talk about that a little bit about 0:13:53.360 --> 0:13:57.000 you know, maybe some sectors that are potential job creators 0:13:57.040 --> 0:13:59.360 that get a lot less attention for. 0:14:00.360 --> 0:14:04.160 So it might help to understand a little bit about 0:14:05.000 --> 0:14:08.360 why all the money spent to pump all of the 0:14:08.400 --> 0:14:11.520 gas and all of the revenue that's been generated from 0:14:11.559 --> 0:14:14.640 the sale of that gas, why so little of that 0:14:14.800 --> 0:14:19.000 money has actually hit the ground locally and entery local economies. 0:14:19.320 --> 0:14:25.160 Because then we can contrast that with energy transition related 0:14:25.960 --> 0:14:29.640 opportunities and understand I think a little better about why 0:14:29.680 --> 0:14:33.400 there in fact are better and more promising and also 0:14:33.680 --> 0:14:39.760 cleaner opportunities to get out there. Yeah, because you know 0:14:39.800 --> 0:14:42.440 the real mystery. I mean, first we have to kind 0:14:42.440 --> 0:14:45.160 of step back and say, well, wait, you know, did 0:14:45.200 --> 0:14:47.960 the gas get pumped? Right? I mean the ten years 0:14:48.000 --> 0:14:51.200 ago there were economic impact studies from the American Petroleum 0:14:51.200 --> 0:14:53.840 and Institute and others saying that this is going to 0:14:53.840 --> 0:14:56.840 create and I'm not exaggerating when I say this, this 0:14:57.000 --> 0:14:59.560 is going to create in the states of Ohio, Pennsylvania, 0:14:59.560 --> 0:15:03.160 and West for Rginia somewhere in the neighborhood of four 0:15:03.240 --> 0:15:07.680 hundred and fifty thousand new jobs. I mean, that's an 0:15:07.720 --> 0:15:16.000 immense number. And the irony is that the amount of 0:15:16.120 --> 0:15:19.240 natural gas that has been produced in the period in 0:15:19.280 --> 0:15:23.240 the ten years since those studies is actually even greater 0:15:23.880 --> 0:15:27.640 than the studies themselves assumed, which means that, if anything, 0:15:28.440 --> 0:15:31.080 the number of jobs and the level of economic activity 0:15:31.240 --> 0:15:34.040 should have been greater than were projected in those studies. 0:15:35.040 --> 0:15:39.080 And so the point is that the gas got produced, 0:15:39.200 --> 0:15:42.640 the money was invested, The industry came to Appalachia, it 0:15:42.920 --> 0:15:48.800 drilled thousands and thousands of wells, it produced an immense 0:15:48.840 --> 0:15:52.200 amount of gas that's now almost forty percent of all 0:15:52.240 --> 0:15:57.480 the natural gas produced in the United States, and that 0:15:57.520 --> 0:16:00.120 gas got sold. And so there's a lot of money 0:16:00.160 --> 0:16:03.920 going on here, literally tens of billions of dollars. And 0:16:03.960 --> 0:16:08.040 so the real question is, since the money happened, why 0:16:08.080 --> 0:16:11.760 didn't it hit the ground at least locally in these economies? 0:16:11.840 --> 0:16:16.760 Where did the money go? And so we haven't quantified 0:16:16.760 --> 0:16:20.720 this yet, but we know having gone through at least 0:16:20.720 --> 0:16:24.880 what the leakage or potential leakage points are, both from 0:16:24.960 --> 0:16:29.360 the front end of the process when we're talking about 0:16:29.480 --> 0:16:32.920 companies investing in the region, going through to the back 0:16:33.000 --> 0:16:36.000 end when the gas is actually pumped and sold. And 0:16:36.040 --> 0:16:39.160 so what we see on the front end when companies, 0:16:39.360 --> 0:16:41.880 you know, when an executive shows up in a county 0:16:41.880 --> 0:16:45.240 commissioner's office and says, hey, I want to invest a 0:16:45.320 --> 0:16:49.440 billion dollars in your county, to which you know, any 0:16:50.000 --> 0:16:54.400 rational county commissioner who has been through three decades of 0:16:54.440 --> 0:16:58.640 economic decline is probably going to respond with gee, tell 0:16:58.720 --> 0:17:03.000 me how I can help you. And so what happens 0:17:03.160 --> 0:17:08.760 is that drilling rigs come in and crews start sinking 0:17:08.800 --> 0:17:13.080 wells throughout the area, and that is all money that 0:17:13.320 --> 0:17:16.199 is invested in the area in a sense. And in 0:17:16.240 --> 0:17:19.440 addition to that, processing plants get built and other forms 0:17:19.440 --> 0:17:24.359 of infrastructure get built, and that's all characterized at least 0:17:24.440 --> 0:17:28.199 as investment in the area that adds to GDP. The 0:17:28.359 --> 0:17:33.840 problem with it is that much of the investment actually 0:17:34.200 --> 0:17:40.800 goes to suppliers and to service providers and to workers 0:17:40.960 --> 0:17:44.320 who are from outside the region. And so, for instance, 0:17:44.359 --> 0:17:46.560 many of the crews that came into the region came 0:17:46.640 --> 0:17:49.720 up from the Gulf Coast in the Southwest, where many 0:17:49.800 --> 0:17:53.240 drilling companies are located, because there isn't a heritage of 0:17:53.280 --> 0:17:56.639 fracking or drilling in the Northeast, and so many of 0:17:56.680 --> 0:18:00.320 them brought in lots of workers from out of state 0:18:00.560 --> 0:18:03.960 and outside the region. The second thing is that of 0:18:03.960 --> 0:18:08.080 course there are many you know, they need raw materials, 0:18:08.119 --> 0:18:11.360 they need equipment and parts to do all of this stuff. 0:18:11.840 --> 0:18:12.000 Well. 0:18:12.040 --> 0:18:17.480 Again, similarly, there is an entire ecosystem in the Southwest, 0:18:17.800 --> 0:18:21.600 in states like Texas, Louisiana, and Oklahoma of companies that 0:18:21.680 --> 0:18:26.240 provide support services to drilling, and so again they relied 0:18:26.359 --> 0:18:29.719 heavily on those services to come into the region and 0:18:29.760 --> 0:18:33.399 do the work that needed to be done. And you 0:18:33.440 --> 0:18:37.359 can make the same observation with respect to professional services, 0:18:37.400 --> 0:18:42.520 whether it's you know, finance, real estate, insurance. In other words, 0:18:42.760 --> 0:18:45.680 there's a great deal on the front end that ostensibly 0:18:46.440 --> 0:18:50.840 was investment quote unquote in the region or in the county, 0:18:50.920 --> 0:18:56.560 which in fact was the acquisition of services from sources 0:18:56.600 --> 0:18:59.639 that were far outside the county, and so that portion 0:18:59.720 --> 0:19:03.320 of them money would never have hit locally. But then 0:19:03.520 --> 0:19:06.080 even when you kick through to the backside of this, Okay, 0:19:06.119 --> 0:19:09.840 we've sunk the well and we're now producing gas and 0:19:09.920 --> 0:19:13.200 we're going out and selling it in the marketplace. Well, 0:19:13.240 --> 0:19:18.480 you know, part of the promise of economic prosperity was 0:19:18.520 --> 0:19:20.199 based on the notion that there were going to be 0:19:20.359 --> 0:19:23.240 a lot of property owners in the region who were 0:19:23.240 --> 0:19:29.800 going to get quite wealthy as a result of royalties 0:19:30.000 --> 0:19:33.280 and lease payments from the companies for the gas that's produced. 0:19:33.640 --> 0:19:36.879 And that between you know, that income on the backside 0:19:36.880 --> 0:19:41.359 and lots of new workers having jobs and money to 0:19:41.440 --> 0:19:44.440 spend locally, that it was going to create this immense 0:19:44.560 --> 0:19:48.639 surge in employment in the region as those dollars filtered 0:19:48.680 --> 0:19:52.120 their way through the economy and the multiplier effect kicked in. 0:19:52.680 --> 0:19:57.000 The problem was on the backside, on the revenue side. 0:19:57.240 --> 0:20:00.720 That first of all, the price of gas that was 0:20:00.880 --> 0:20:04.160 anticipated back in two thousand and nine and twenty ten, 0:20:04.640 --> 0:20:09.040 even after the fracking boom took place, was never expected 0:20:09.080 --> 0:20:11.640 to fall below about four and a half dollars per 0:20:11.720 --> 0:20:16.800 million BTUs, And I'm quoting now, by the way, from 0:20:16.880 --> 0:20:22.919 the Energy Information Administration, And at that time the EIA 0:20:23.240 --> 0:20:26.920 expected that after kind of bottoming out at about four fifty, 0:20:27.119 --> 0:20:29.919 gas would prices by the end of the decade or 0:20:30.119 --> 0:20:34.960 now essentially, would generally return to anywhere between about six 0:20:35.040 --> 0:20:39.439 and seven and a half dollars per million BTUs. Well, 0:20:39.560 --> 0:20:42.600 the problem, of course, is that that's not what happened. 0:20:43.080 --> 0:20:47.160 The price of gas dropped to at times below two 0:20:47.240 --> 0:20:53.320 dollars and have never recovered consistently to more than the 0:20:53.440 --> 0:20:57.680 upper twos, sometimes hitting three dollars, which is where we 0:20:57.720 --> 0:21:02.360 are about right now. In other words, words, the assumption 0:21:04.520 --> 0:21:07.800 of revenue coming in from the sale of gas was 0:21:08.040 --> 0:21:12.960 basically at least twice what the actual revenue figures were, 0:21:13.600 --> 0:21:16.840 so you kind of cut that big nut, that big 0:21:16.960 --> 0:21:21.359 economic uh, you know, input of energy into the economy 0:21:21.600 --> 0:21:24.399 by half, right off the top. But then another a 0:21:24.440 --> 0:21:27.560 bunch of other factors kick in. The first is that 0:21:27.720 --> 0:21:31.800 a lot of property, it turns out on which wells 0:21:31.880 --> 0:21:36.560 are sunk, isn't actually owned by local people. In many cases, 0:21:36.600 --> 0:21:42.120 it's owned by companies corporations that may have a significant 0:21:42.119 --> 0:21:45.200 local presence or not. And sometimes you know, the property 0:21:45.240 --> 0:21:48.080 is owned by individuals from out who live outside the region, 0:21:48.920 --> 0:21:51.720 and so much of that money does not enter the 0:21:51.760 --> 0:21:55.760 local economy. And then on top of that, you also 0:21:55.880 --> 0:22:00.320 run into another interesting issue, which is that for those 0:22:00.320 --> 0:22:02.800 people who do live in the region and who do 0:22:02.920 --> 0:22:06.760 own the property and who do receive royalties, many of 0:22:06.800 --> 0:22:10.040 them don't spend a lot of that money. And so, 0:22:10.520 --> 0:22:13.399 you know, starting with the fact that the price of 0:22:13.480 --> 0:22:17.479 gas is only about half or less than what it 0:22:17.520 --> 0:22:20.320 was originally expected to be, and then you look at 0:22:20.359 --> 0:22:24.640 those other leakage points, it's frankly quite likely that the 0:22:24.720 --> 0:22:29.480 actual amount of money entering local economies was only about 0:22:30.560 --> 0:22:34.800 ten to perhaps twenty percent of what it was anticipated 0:22:34.800 --> 0:22:38.000 to be when the economic impact studies were done. There's 0:22:38.040 --> 0:22:41.760 almost no downstream effect as a result of this economically, 0:22:42.200 --> 0:22:44.600 and that's important because the other thing we know is 0:22:45.000 --> 0:22:48.639 that the number of jobs that the industry was expected 0:22:48.640 --> 0:22:51.760 to create directly never got as large as it was 0:22:51.800 --> 0:22:55.320 supposed to. And moreover, many of the jobs that were 0:22:55.359 --> 0:23:00.280 created were taken by out of state workers. And so 0:23:00.720 --> 0:23:04.240 when you put all of those factors together, what you 0:23:04.320 --> 0:23:06.679 come up with as a scenario in which, yes, it 0:23:06.800 --> 0:23:11.760 is actually understandable. There's not really a mystery about how 0:23:12.560 --> 0:23:16.159 literally tens of billions of dollars seems to have just 0:23:16.200 --> 0:23:20.399 evaporated from the economy. There actually are rational explanations for 0:23:20.480 --> 0:23:24.000 how it could have happened. There are profound structural reasons 0:23:24.480 --> 0:23:28.320 why this particular extractive industry, and for that matter, other 0:23:28.400 --> 0:23:33.399 extractive industries, are really lousy platforms for economic revival and 0:23:33.480 --> 0:23:37.240 job creation. And it starts frankly with the fact that 0:23:37.320 --> 0:23:39.840 even when you look at Bureau of Labor Statistics numbers, 0:23:40.560 --> 0:23:44.760 when you look specifically at the mining sector generally, which 0:23:44.760 --> 0:23:49.320 includes oil and natural gas extraction, it's only about twenty 0:23:49.359 --> 0:23:54.680 two cents of every dollar in GDP that it creates 0:23:55.040 --> 0:23:59.919 that is actually allocated to labor, to wages and salaries, 0:24:00.720 --> 0:24:05.280 and that's an remarkably low figure compared to other industries 0:24:05.320 --> 0:24:09.639 like construction, for instance, that number seventy five percent. Most 0:24:09.680 --> 0:24:13.360 other industries are somewhere in the forty to sixty percent range. 0:24:13.800 --> 0:24:16.080 And so if you had to pick an industry upon 0:24:16.200 --> 0:24:21.920 which you know, to try to build a job rich economy, 0:24:22.119 --> 0:24:24.000 this would be one of the worst ones that you 0:24:24.040 --> 0:24:27.200 could pick, even right out the gate. And then on 0:24:27.280 --> 0:24:30.080 top of that you add in all of those other 0:24:30.160 --> 0:24:34.240 factors that I just went through. And so that's the 0:24:34.320 --> 0:24:38.040 reason why we say there are other, better, more sustainable 0:24:38.320 --> 0:24:42.640 choices out there, because when you look at many of 0:24:42.680 --> 0:24:46.560 the energy transition industries that are out there, you know, 0:24:46.600 --> 0:24:50.200 which include not just renewable energy like wind and solar power, 0:24:50.480 --> 0:24:54.760 but also, and very importantly for this region, energy efficiency. 0:24:56.520 --> 0:25:00.360 We're talking about industries that not only have our much 0:25:00.400 --> 0:25:04.919 more labor intensive and less capital intensive, but we're also 0:25:05.040 --> 0:25:11.560 talking about businesses that in which the suppliers are local. 0:25:12.040 --> 0:25:15.359 I mean literally, if you talk about, Okay, we're going 0:25:15.440 --> 0:25:18.960 to do a great energy efficiency project, We're going to 0:25:19.000 --> 0:25:22.800 go in and retro fit you know, thousands of houses 0:25:22.880 --> 0:25:25.800 or buildings in the region, and in this particular region, 0:25:25.840 --> 0:25:29.400 there are many, many thousands of older buildings and houses 0:25:29.440 --> 0:25:34.040 that can benefit from retrofitting. One of the beauties of 0:25:34.400 --> 0:25:39.800 energy efficiency is that these are shovel ready projects. You 0:25:39.840 --> 0:25:42.600 can go in and start insulating and replacing lighting and 0:25:42.600 --> 0:25:46.639 appliances tomorrow. It doesn't require a lot of planning. It 0:25:46.680 --> 0:25:49.920 doesn't require a lot of stuff that we hear about 0:25:49.920 --> 0:25:52.360 when we're talking about, you know, how do we invest 0:25:52.440 --> 0:25:56.960 stimulus dollars, we'll find shovel ready projects. Energy efficiency is 0:25:57.000 --> 0:26:01.520 shovel ready all the time. The second thing is that 0:26:02.400 --> 0:26:06.960 energy efficiency, and for that matter, distributed solar and other things, 0:26:07.600 --> 0:26:13.760 these are services that are provided by predominantly local suppliers. 0:26:14.640 --> 0:26:18.520 You know, we have local insulators, we have local home 0:26:18.560 --> 0:26:22.679 remodeling firms, we have local firms that do windows and 0:26:22.760 --> 0:26:28.320 door replacements. And so one of the other beneficial effects 0:26:28.720 --> 0:26:35.720 of pursuing the transition economy and energy is that more 0:26:35.840 --> 0:26:39.719 of the dollars that are spent actually stay in the community, 0:26:41.080 --> 0:26:44.199 as opposed to dollars that are spent on you know, 0:26:44.280 --> 0:26:47.560 paying your electric bill, which probably goes to some far 0:26:47.600 --> 0:26:51.640 away utility. And so there really is you know, there's 0:26:51.760 --> 0:26:53.320 kind of a triple benefit here. 0:26:53.520 --> 0:26:56.040 What do you think about the I've heard this floated 0:26:56.040 --> 0:27:00.600 a few times, this idea that you could employ people, 0:27:01.680 --> 0:27:05.240 you know, capping and remediating wells, especially as more and 0:27:05.280 --> 0:27:10.040 more of the kind of early fracking companies go bankrupt 0:27:10.400 --> 0:27:13.040 or you know, just decide that these wells are not 0:27:13.280 --> 0:27:15.600 worth keeping productive anymore. 0:27:15.680 --> 0:27:22.760