Anybody who grew up in Western Pennsylvania, worked in a mill or rooted for a football team called the “Steelers” might find it hard to believe, but there are more people in Pennsylvania working in the oil and gas industry than there are in the steel industry.
There were 20,999 people employed in the oil and gas industries in Pennsylvania in 2013 while employment in iron and steel mills and ferroalloy manufacturing totaled 13,489, according to the Center for Workforce Information and Analysis, a branch of the Pennsylvania Department of Labor and Industry.
Marcellus Shale gas development has led to a resurgence in Pennsylvania’s energy industry. But while oil and gas jobs already exceed steel, could the industry ever come close to doing for this region what steel did at its peak?
The short answer is probably not. But it might not be far behind.
At its highest point, the steel industry generated about 12 jobs for every $1 million worth of steel produced, according to an analysis conducted by University of Wyoming economics professor Timothy Considine. Steel production, at the time, was much more labor intensive than it is today, Mr. Considine said. And its production was linked with a number of supporting industries that also created jobs.
The natural gas industry generates about six jobs for an equal production cycle, which on its face suggests the industry won’t be as influential as steel was.
However, Mr. Considine said, when taking into account the entire economic impact of shale development in the United States, its influence grows.
“There’s a second effect that shale is having on the economy that is sort of playing out right now,” Mr. Considine said. “That is, the cheap or relatively inexpensive natural gas supplies are enticing firms outside of the oil and gas industries to build, to invest millions or in some cases billions of dollars to use the natural gas.
“That effect is not adequately represented in the economic studies on natural gas,” he said.
Steel mills reopen
Shale gas, ironically enough, has been a boon for the steel industry as steel pipe and casings are needed to extract natural gas from shale rock.
Sewickley-based Esmark, Inc., announced earlier this month plans to convert a recently closed steel finishing mill into an industrial services manufacturing center to support oil and gas activities. The company anticipates adding 50 to 75 jobs as part of its new endeavor.
A $650 million mill in Youngstown, Ohio, opened in 2012 specifically to start producing material needed for oil and gas development.
“It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago,” John Surma, former chairman and CEO of U.S. Steel, said in a speech in 2012.
The flurry of economic activity comes on the heels of an era of manufacturing setbacks. The United States lost more than 1 million manufacturing jobs between 1999 and 2008 because of high natural gas prices, said Christopher Guith, senior vice president for policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy.
But in the four-year period between 2008-12, the natural gas industry alone added 2.1 million jobs to the U.S. economy, according to global information company IHS, based in Colorado. By 2025, that number is expected to grow to 3.9 million jobs.
“If you look in the past five years, during the greatest recession since the Great Depression this was really the only industry that was creating jobs, and it was creating them at a huge rate,” Mr. Guith said. “It is an anchor already, and I think it will continue to be.”
But, he said, “it’s in a different form than steel.”
With steel, there were physical reminders about how mighty the industry was. Steel mills swallowed acres of real estate, some stretching more than a mile long. Generations of families worked for the same company — at the same foundry.
“When they put the blast furnace in Braddock or wherever, there’s a very good chance that’s where it would be until its demise,” said Thomas Durkin, president of the International Union of Operating Engineers Local 66.
With shale jobs, the work sites move constantly. And they are much smaller, both in size and workforce.
The economic benefits are different, too, Mr. Durkin said. Steel jobs were numerous and high-paying. Shale jobs, while abundant, are not as plentiful. But they are more rewarding financially with an average annual salary of $71,220, according to the American Gas Association, about $20,000 more than structural iron and steel workers earn annually, according to the Bureau of Labor Statistics.
Add to that what land owners earn from leasing their mineral rights, and some people are profiting heavily from the industry.
“I would say definitely the economic benefits from the natural gas industry are equal to or possibly even surpassing what the steel industry made possible in the heyday of production in the Mon Valley,” Mr. Durkin said.
While there are more than 20,000 people involved in the industry in Pennsylvania, that number is smaller than what it could be, considering the pace of production is slowed by a lack of equipment and pipeline infrastructure, said Andrew Kleit, a professor of energy and environmental economics at Penn State University.
Still, it has a long way to go to catch steel. At its peak, U.S. Steel employed 201,000 people in its company, almost 10 times as many people as are currently employed in the oil and gas industry in Pennsylvania.
“It’s not going to be the halcyon days when you had thousands of guys marching to the steel mill with their lunch buckets and their hard hats, but it’s still going to be pretty good,” Mr. Considine said. “A lot better than abandoned downtowns.”
Michael Sanserino: email@example.com, 412-263-1969 and Twitter @msanserino.
First Published September 17, 2014 12:00 AM