Better Path Tourism Letter
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Governor Tom Wolf
508 Main Capitol Building
Harrisburg, PA 17120

Dear Governor Wolf,

We the undersigned organizations urge you to consider the irrefutable economic case for saving Pennsylvania’s sustainable tourism future from the fracking industry.

Pennsylvania made a great mistake ten years ago and we now have the evidence to understand it. We could have chosen to protect our large and growing tourism industry, which was producing significant job growth, state and local taxes, and economic development. Instead, the state favored the gas industry, famous for boom and bust cycles, requiring few employees, skilled in tax avoidance, and with a deplorable history of environmental degradation.  

We have to remember that in 2008 the gas industry was hailed as “a game changer,” “the goose that lays the golden egg,” “a generational employment asset.”  We were told we were in for a bonanza of jobs and taxes that would stretch for forty years. It was a gold rush, and the gas industry fed the frenzy by spreading money around and commissioning academics to write papers that made wildly inflated claims.

The Pennsylvania Wilds and our beautiful countryside are within a few hours’ drive of 50 million urban and suburban residents who often need a respite from their crowded lives. These lands are the economically sustainable future of Pennsylvania. But who will come to visit an industrialized landscape of well pads, pipelines, access roads, and compressor stations? Who wants a getaway experience ruined by truck traffic, noxious fumes, noise and light pollution?

The Commonwealth has already made a substantial investment in the PA Wilds, which contain 26 state parks and two million acres of woodland, much of it state and federally owned. The term PA Wilds dates to 2003, when the Rendell administration branded the area and began to market it as a tourist destination. This effort was immediately successful, bringing a marked increase in visitors and subsequent growth in the depressed rural economy.  

"Significantly for local communities, this tourism-fueled increase in activity has led to gains in employment and
earnings. Particularly high growth rates from 2003 to 2005 coincided with the implementation of the Pennsylvania Wilds initiative, suggesting that initiative’s positive contribution to tourism employment.”
Pennsylvania Wilds Initiative Program Evaluation (2010), Pa Department of Conservation and Natural Resources. 

When the gas industry arrived, the state's tourism marketing efforts greatly diminished. The gas industry promised a golden future of jobs, taxes, and economic development. However, it has delivered only a small fraction of the benefits that the tourist industry already provides.

In January 2007, just as the Marcellus industry started to ramp up, the U.S. Department of Labor Statistics reported 20,700 jobs in Pennsylvania's Mining and Logging sector, which includes gas and oil drilling. A gain of 18,300 jobs was reported by January 2015, largely attributable to the Marcellus industry. Yet today the Mining and Logging jobs have fallen back to 27,700, or just 7,000 more than in 2007.

The U.S. Department of Labor Bureau of Labor Statistics reports that the Leisure and Hospitality sector currently counts 577,000 jobs in Pennsylvania with a job growth of 72,100 over the last seven years since the recession. Currently, for every job in the Marcellus Industry there are over 82 jobs in Leisure and Hospitality. The numbers speak for themselves: 577,000 verses 7,000 jobs. 

Pennsylvania has commissioned its own economic studies on tourism, the latest dating to 2015. Its statistics, being more tightly focused on travel, are slightly lower than the federal figures on Leisure and Hospitality.
"The Economic Impact of Travel in Pennsylvania Tourism Satellite Account Calendar Year 2015"              

Within the PA Wilds, the travel industry produced 11.2% of total labor income in 2015. That year, travelers spent $1.7 billion in the Wilds, which directly supported 12,632 jobs that provided $329 million in wages. The PA Wilds travel industry paid $89.9 million in state and local taxes and $78.7 million in federal taxes.

On the state level, travelers were responsible for close to $4.4 billion in Pennsylvania state and local tax revenues and an additional $4.5 billion in federal taxes in 2015. That far out-shines the impact-fee revenue from gas drilling. Below is a statement from the Marcellus Shale Coalition's website highlighting impact fees paid.
“$1.5 Billion and Counting: Since 2012, Pennsylvania’s natural gas impact tax has generated $1.5 billion (and counting) in new revenue. These revenues … total approximately $200 million annually....”

Let’s spell it out: the $4.4 billion tax revenue realized from the tourist industry in 2015 equaled 22 times the gas industry's average annual impact fees of $200 million. The number of PA jobs directly supported by travel and tourism reached a new record high of nearly 310,900 jobs in 2015 compared to the gas industry's current 7,000 direct jobs.

Nevertheless, President David Spigelmyer of the Marcellus Shale Coalition, in an op-ed in the Williamsport Sun-Gazette, wrote, "According to a recent PricewaterhouseCoopers study, natural gas development supports more than 320,000 jobs and contributes $45 billion to the Commonwealth’s economy."
      Sun-Gazette, October 9, 2017 

Mr. Spigelmyer claimed that the study was reporting exclusively on natural gas development. That was not true, as statistics in the report included both gas and petroleum as well as all ancillary business and services such as propane, fuel oil, and gasoline truck drivers and a myriad of other petroleum-related occupations.  Jobs in other industries deemed to be “supported” by petroleum and gas activities made up two-thirds of the 320,000 gross reported number.

Mr. Spigelmyer is trying to obscure the small job numbers and small economic impact of the fracking industry. He is following the American Petroleum Institute's strategy of commissioning and citing highly inflated economic studies designed to bully the Commonwealth into giving concessions on taxes, environmental protections, and access to public lands. The fracking industry also needs the hype since it is fueled by investor money, a situation which has grown increasingly tenuous.

In March of 2017, in an article entitled “American Shale Firms Don’t Give a Frack About Financial Returns”, The Economist took shale fracking to task for its unstable finances and inability to turn a profit.

“Shale firms are on an unparalleled money-losing streak. About $11billion was torched in the last quarter, as capital expenditures exceeded cash flows. The cash-burn rate may well rise again this year…” 

The 5th edition of a Compendium on the impacts of gas drilling published in March of 2018 had this to say about the economics of hydraulic fracturing,

“ …in 2017, a modest recovery in prices brought renewed industry enthusiasm for fracking. However, because of the rapid depletion of individual shale wells and the falling output of major shale basins, including the Bakken and the Marcellus, operators must reinvest profits to drill new wells at an increasingly rapid pace just to maintain the same level of extraction…” 

It is difficult to understand the strategy of allowing a small, economically unstable, outside industry to ruin the future of our much larger domestic travel industry. Even if a severance tax is imposed, it would be a fraction of the taxes derived from visitors. If tourism in the rural areas of the state is promoted vigorously, the new tax revenues generated would render the gas industry irrelevant.  It does come down to a choice between the two, though, because we can't expect vacationers to visit a ruined, industrialized landscape.

In conclusion, Governor Wolf, we implore you to examine the irrefutable facts. There is only one viable economic decision to be made, one which benefits both the present-day economy and generations of Pennsylvanians to come.  

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