The Heritage Foundation’s recent analysis, “Hydraulic Fracturing and Economic Outcomes: A Study of Marcellus Shale Counties in Pennsylvania and New York”, claims that:
- “New York’s 2010 hydraulic fracturing ban has made residents in southern New York $11,000 poorer per person—$27,000 per household—than had fracking been permitted.
- Pennsylvania’s embrace of hydraulic fracturing transformed seven counties into economic hubs, whereas New York counties forfeited their own potential growth.
- Oil and gas exploration increases overall economic growth and individual incomes—New York should end its ban on fracking and explore the Marcellus Shale.”
The basis of Heritage’s claims is a correct finding – economic output (gross domestic product) per capita in Pennsylvania counties where fracking is permitted has outstripped that in Southern Tier New York Counties where it isn’t. But, did that activity increase “individual incomes” of area residents, as claimed?
The Twin Tier counties are relatively depressed parts of the country. Like much of the Northeast and Midwest, they have suffered from the loss of manufacturing employment. The areas have lost population and have lower-than-average personal incomes.
In 2023, the median household income nationally was $78,538. None of the Twin Tiers counties had incomes that reached that level. In Cattaraugus County, New York, and Potter County, Pennsylvania, the median was about $20,000 below the national level. The counties with the highest incomes, Tioga County, New York, and Wyoming County, Pennsylvania, were 10% below the national level. Overall, median household incomes were similar for New York and Pennsylvania counties.
Did the Increased Economic Activity from Fracking benefit Twin-Tiers Residents?
The landowners who leased their land to natural gas producers received economic benefits from natural gas extraction. But is it true that “New York’s 2010 hydraulic fracturing ban has made residents in southern New York $11,000 poorer per person—$27,000 per household—than had fracking been permitted?”
The data shows that per-capita incomes in New York and Pennsylvania counties in the Twin-Tiers have followed similar trajectories since 2001. Pennsylvania counties did not see a bump beginning in 2014, reflecting the growth of natural gas extraction in those counties. The reason is that most of the benefits of the additional economic activity flowed to natural gas producers, companies located outside the region.
Conclusions
The Heritage Foundation claimed that residents of the Southern Tier missed out on thousands of dollars of personal income from the economic activity generated by fracking in the Marcellus Shale region. However, the data does not support that argument. Household incomes are not higher in the Pennsylvania portion of the Twin Tiers. Nor has per capita personal income growth been greater there since the introduction of fracking technology in Pennsylvania. Instead, most of the economic benefit flowed out of the region to natural gas companies.