Gas economics in an Arkansas County

Economic benefits, but questions remain

By BRITTANY McNAMARA

WHITE COUNTY, AR — With the gas drilling industry moving into Sullivan County, residents are bound to see a change in the local economy. The question is, how great of a change will there be, and who will feel the effects of it? White County, AR, which was the subject of several studies regarding the economic impact of horizontal drilling, is similar to Sullivan County, NY in such areas as population size, county land area, employment and poverty levels. Although not entirely similar, the economic impacts of gas drilling on Sullivan County may be comparable to that of White County.

White County sits atop the Fayetteville Shale, which contains a vast supply of gas. Drilling began in the region in May 2006. According to a study by the University of Arkansas’ Sam M. Walton College of Business, the county experienced considerable economic growth due to the Fayetteville Shale play.

The study found that between 2002 and 2006, wage growth totaled 11 percent, but in 2007 alone, after gas drilling had been established, wage growth was 14 percent. Sales tax collections typically remained at roughly $1 million a month between March 2004 and November 2006. But since then, collections have significantly increased resulting in the sales tax of May 2008 being 37.8 percent higher than sales tax in May of 2007.

Also according to a study called “Drilling for Dollars” by the Perryman Group, a Texas-based financial analysis firm, the community benefits not only directly from gas drilling activities, but also by spillover effects.

These spillover effects bring more business to restaurants and retailers from drilling crews and royalty recipients, more activity to motels and hotels from business travelers or those needing a conference center, and increased real estate activity and residential development due to greater personal income and employment.

Employment increased as well. With 3,844 jobs added to the county between January 2002 and July of 2008, over half of these positions were added after January 2006. A decrease in the unemployment level from 6.2 percent to 5.1 percent as of July 2008 accompanied the rise in employment. But the employment picture in White County is not entirely rosy. There are specific industries that are experiencing job losses, such as the manufacturing industry which has lost 1,300 jobs. At the same time, leisure industry jobs increased by almost 2,000 since 2002.

Additionally, roughly 300 new businesses have moved to Searcy, a large city in White County, since the Fayetteville Shale production began.

A downside to this potential economic burst is how short term the effects are. Analysts point out it is important to remember that natural gas is a non-renewable resource that very well may be depleted in 20 or 30 years. Rod Bryan, an environmental lobbyist for the Arkansas Conservation Alliance (ACA), explained that while nearly everyone in the community is receiving economic benefits, the income will not last forever. One of the biggest concerns of the ACA and the Arkansas Local Foods Initiative is that “farming has been abandoned,” said Bryan.

Johnny Wheetley, president of the Fayetteville Shale Citizen Association and an agriculture consultant, is not convinced that everyone is profiting from the drilling. He remarked that he is “not sure they [the community] are benefitting from the drilling other than in the form of jobs being created.” However, commenting on the revenue from the drilling, he stated that “the dollar amount is so high that it can’t be overlooked. While the rest of the country is dealing with the recession, the revenue from the drilling is holding up the economy for the county.”

Wheetley explained that economic distribution and problems with gas companies “can be worked out as more people gain knowledge of the situation.” With this knowledge, he said, “citizens will be able to have the gas companies do the job correctly rather than the way they want to.”

Bryan said that luckily for those in the Marcellus Shale play area, “Pennsylvania and New York are much better prepared then Arkansas was for the drilling industry.”

Many critics, such as Bryan and Wheetley, readily identify health and environmental concerns associated with the horizontal gas drilling regardless of the region where it is taking place. However, the economic implications do not seem to be causing for disconcerted citizens, especially in White County. The River Reporter contacted several individuals in Arkansas with knowledge of the situation, and no one was found to have anything other than positive remarks about the economic impact of the gas drilling on their community.

[Brittany McNamara is a student at Eckerd University who recently completed an internship at The River Reporter.]