Sunday, May 06, 2012

PA Booming While NY Loses Out on Billions

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In yet another example of liberal policies hurting economic activity, the state of New York is sitting on a veritable pool of natural gas and won't let anyone touch it. Pennsylvania and West Virginia, to their credit, have put procedures and policies in place to safely remove the gas while reaping huge benefits and reducing natural gas retail costs for homeowners and businesses:

PITTSBURGH - Marcellus shale gas wells in Pennsylvania generated about $3.5 billion in gross revenues for drillers in 2011, along with about $1.2 billion in West Virginia, according to an analysis by The Associated Press.
That's a huge amount of revenue for businesses and employees and a nice windfall for the state in tax revenue. How many jobs have been created by exploiting these wells? Think about not only the drilling companies but the people who supply them: drill equipment suppliers, fuel suppliers, local restaurants, motels, convenience stores, etc. The ripple effect is enormous. It's only going to get better:

Patrick Creighton, a spokesman for the Marcellus Shale Coalition, an industry group, estimated that it costs the industry about $5 million to bring a well into production. With about 2,200 active wells in the state, that comes to $11 billion in additional investments, mostly over the last four years. The industry is also building or planning billions of dollars of new pipeline construction.

But not just businesses are booming, individuals are making a nice chunk of change as well:

Creighton said the minimum royalty in Pennsylvania is 12.5 percent of well revenues, meaning property owners here were paid more than $400 million last year.
So why is New York missing out on what is essentially the fastest growing business in the region? Because the legislature--led by mainly urban liberals based in NYC--are blocking any opportunity for shale gas to be extracted. The ban is in place until June of this year but I expect that the moratorium will be extended, thus allowing Pennsylvania to continue being the premiere state for gas extraction and sale. If Gov. Cuomo does see the light and allow hydraulic fracturing, I would bet that the regulations will be so oppressive that the state will fail to see the benefits other have. Environmentalists will not give up without a fight, though.

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