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Study Finds Sales Tax Gains, Scant Job Creation in Utica
YOUNGSTOWN, Ohio – A study conducted by the Maxine Goodman Levin College of Urban Affairs at Cleveland State University finds that oil and gas exploration is spurring wealth across those counties where drilling is most active. The study also found that job creation in the Utica, hampered by several factors, has yet to catch fire.
The authors, Edward W. (Ned) Hill and Kelly L. Kinahan, compare counties considered "strong" shale areas with those moderate, weak or nonshale counties in Ohio.
By the first quarter of 2012, strong shale counties -- that is, 15 counties in the eastern part of the state where the Utica is producing gas rich in liquids --– experienced double-digit growth in sales receipts. By the third quarter, those receipts hit a peak of 24% and averaged 20% for the year, the study found.
Mahoning, Trumbull and Columbiana counties are considered "strong" shale counties, the study showed. Trumbull is the northernmost "strong" county, while Noble and Monroe counties represent the southern edge of the core play.
Moderate and weak shale areas lay mostly to the west of this band.
"This growth far outpaces the moderate, weak, and nonshale counties during 2012," the study's executive summary said of the strong areas. Through the first quarter of 2013, sales receipts were still robust -- up 14.2% collectively compared to the same period a year earlier -- in these counties.
By comparison, those counties with little or no drilling activity saw more modest increases through 2012. Moderate shale counties witnessed 6.7% growth in 2012, weak counties a 4.9% increase, while nonshale counties saw receipts rise 8.7%, the study shows.
"Rapid growth in strong shale counties has continued through the first quarter of 2013 and remains much faster than sales growth elsewhere in the state," the report said.
According to the authors, strong shale counties collected $15.4 billion in sales receipts during 2012 versus $12.8 billion in 2011. Through March 2013, these 15 counties experienced another $4.1 billion in new sales activity.
Job growth, on the other hand, has not accelerated nearly as quickly as sales in the strong and moderate counties, but has outpaced nonshale areas in the state, the study showed.
Strong shale counties showed an overall employment increase of 0.1% during the first quarter of 2013, while moderate shale counties witnessed a 0.2% increase. Other groups of counties experienced slight declines in job growth during the period, the study says.
"Employment growth is currently muted by three forces," the study concludes. The first factor is the slow pace of midstream development throughout the state, the second is the use of highly specialized workers in the build-out phase of the Utica, and the third is that training is still in the early stages for Ohio's incumbent workforce.
The study was published in the Levin College's "Ohio Utica Shale Gas Monitor."
CLICK HERE to download the study.
Published by The Business Journal, Youngstown, Ohio.
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