On Thursday, State officials released the much anticipated 2012 Utica shale production report. Administration officials were quick to celebrate the findings of the report and heralded it as the beginning of a “new boom” in Ohio. Realistically though, this report includes information that should cause officials to temper their expectations – at least in the short term.
As we have written in the past, the Kasich administration and the oil and gas lobby both promised that shale exploration would bring a wave of new jobs to Ohio. While recent reports have noted that not only were these claims dubious to start with, in reality the job growth is not nearly as strong as they originally estimated. The report provides some clues on why that is. Only 87 horizontal wells were producing oil and gas last year at some point – most of them were only active for three months or less. And while officials expect that number to increase to 362 by the end of this year it is still unlikely that the increase will lead to the giant job expansion promised.
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This month marks the five year anniversary of Governor Strickland signing Senate Bill 221 into law. Republican leaders in both the House and Senate, large and small businesses, consumer groups, labor unions, faith leaders, hospitals, farmers, and the environmental community all fought for its passage. After more than a year of public hearings this bipartisan piece of legislation passed both chambers of the Ohio General Assembly with only one ‘No’ vote.
Five years later there is a lot to show for the hard work that went into the process of creating one of the most aggressive renewable and energy efficiency standards in the country. A recent report commissioned by the Ohio Manufacturer’s Association shows that the energy efficiency standard—requiring utilities to use less electricity—will save Ohio residents and businesses $5.6 billion dollars.
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On Monday, the Cleveland Plain Dealer released a PolitiFact that examined recent ads by the oil and gas industry claiming to have created 40,000 jobs last year in Ohio. PolitiFact gave the ad its lowest rating — “Pants on Fire” — and strongly questioned the industry’s job creation claims.
PolitiFact found that the ads overstate the number and type of jobs created and failed to disclose that many of these jobs may have gone to out-of-state workers. In addition, they found the fact that the numbers were based on economic modeling rather than actual surveys of employers undermined the veracity of the claim.
PolitiFact also noted the high rate of turnover in industry hiring data, showing that even if Ohioans are being hired, the work is often temporary in nature. [Read more…]
Yesterday, a House committee adopted a version of the state two-year budget (Sub. H.B. 59) that represents a dramatic change from what was introduced by Governor Kasich in early February.
In brief, here’s what’s in and what’s out: [Read more…]
If there was any question before Tuesday that the House Republican caucus was in the pocket of the oil and gas industry, the newest version of the state budget should put that issue to rest.
The substitute version of the state budget (Sub. H.B. 59) that House leadership put forward yesterday removes almost every substantial policy change in the budget that affected the oil and gas industry.
As introduced, Governor Kasich’s budget included multiple changes that addressed outstanding fiscal and regulatory concerns, including: [Read more…]
House leadership have spent their two-week spring recess reviewing over 800 amendments that legislators want to see included in the state budget. Many of them will be incorporated into a new version of the budget (House Bill 59) that is expected to be adopted by the Finance committee next Tuesday.
Below are three issues to keep an eye on next week as the budget process moves forward. [Read more…]
In recent years, politicians, oil and gas lobbyists, and industry experts all promised that expanded oil and gas drilling in Ohio would lead to job creation and economic growth. However, a new report from Cleveland State University shows that even though economic activity increased in shale counties in 2012, employment growth failed to materialize.
A March report from the Maxine Goodman Levin College of Urban Affairs examined two economic indicators to see if there existed any early economic trends in the development of the shale region in Ohio. [Read more…]
On Thursday, members of a H0use subcommittee questioned Public Utilities Commission (PUCO) Chairman Todd Snitchler about language in Governor Kasich’s two-year budget (House Bill 59) that would allow utility companies to recover costs associated with rate discounts they provide to large energy users from consumers outside of their territory.
Currently, utilities like First Energy or AEP can negotiate “reasonable arrangements” with large industrial users — oil refineries or auto factories, for example — who consume large amounts of energy. These arrangements allow the industrial users to pay a discounted rate, typically in exchange for a plant expansion that creates jobs and boosts the local economy. In exchange, the cost of the discount is spread across the bills of all the other consumers within the utility’s service territory.
HB 59 includes a change that would allow those costs to be picked up by utility customers all across the state. For example, if First Energy decides to enter into a reasonable arrangement with a factory in Northeast Ohio, the cost of this rate reduction could appear on the bill of customers in Southeast Ohio.
The policy shift caught the attention of subcommittee members. Reps. Mike Ashford and Denise Driehaus both asked Chairman Snitchler whether this policy is fair to ratepayers in other utility territories who are unlikely to share in the expanded economic activity, even while picking up the tab. [Read more…]
Communities in Ohio have borne the brunt of the deep cuts in Governor Kasich’s state budgets. In fact, just this week it was reported that local governments will receive $1.4 billion less in the next two years compared to fiscal years 2010 and 2011.
On top of those cuts, many communities are dealing with costs associated with oil and gas exploration in their communities. Every horizontal well that is drilled requires millions of gallons of water and millions of pounds of equipment and supplies that must be trucked to the well location. County roads in eastern Ohio that were quiet not that long ago are now — or will soon be — well-traveled by large tankers and trucks. This will have a serious effect on road maintenance and road safety in these communities.
In a nod to these issues, the Kasich administration’s two-year budget plan (HB 59) includes a new horizontal well loan program. Under the plan, well owners would pay counties an upfront $25,000 fee for use by local government entities to defray costs associated with drilling activity. The catch is this: local governments that receive these funds must repay the entire amount back to the well owner starting a year after the payment. While the administration portrays the new fee as helping local governments cover unforeseen costs, in reality they will continue to be on the hook for the entry amount of these costs.
Communities all over Ohio have been hit hard by this administration’s cuts, but this proposal will do nothing to help them. Meanwhile, $200 million in new taxes on oil and gas drillers is going toward a tax cut for the wealthy rather than roads and infrastructure.
Instead of a shell game, lawmakers need to find a policy that delivers real relief to these communities in the coming years.