Natural Gas NOW
Bureau of Economic Analysis data on growth in the Gross Domestic Product of Williamsport vs. Ithaca shows the former comes out on top again thanks to gas.
Eight years ago I wrote a post for Energy In Depth titled “Williamsport Explorers Beat Ithaca Winers with Walk-Off Home Run.” It was all about the fact Williamsport, Pennsylvania was, as a result of natural gas development, then growing its metropolitan gross domestic product (GDP) at a rate that blew Ithaca, New York, completely away.
It was a fair comparison as the cities are roughly the same size, but one had the fortune to be in Pennsylvania where natural gas had been allowed to prosper, while the other was in a state then incapable of moving forward politically. These several years later, New York has now closed the door “at this time” while Williamsport continues to beat Ithaca, as well as Binghamton and, especially, Elmira.
The latest data from the Bureau of Economic Analysis tells us the following about what’s happening in Binghamton, Elmira, Ithaca and Williamsport. The first two are the primary cities that define New York’s long-suffering Southern Tier. Ithaca is, well, “Planet Ithaca,” a world of academic bright lights surrounded by the empty space those snobs suppose the rest of Upstate New York to be. And, Williamsport is the eastern capital of the Marcellus Shale industry, the regional headquarters of its Pennsylvania Northern Tier gas operations.
The key information from the BEA analysis is summarized above. It compares the four small cities, each of which defines a small metropolitan area, with each other and the U.S. as a whole. The U.S. saw its GDP grow by 2.1% in 2017. Meanwhile, Williamsport grew by 2.6% and all three Upstate New York cities grew at rates ranging from a negative 0.3% in poor Elmira to a max, but still subpar, 1.5% in Planet Ithaca.
But, it’s what contributes to this growth that is brought out in this table. Notice where Williamsport’s GDP growth comes from; natural resource development that is completely lacking in the three New York cities. It accounts for 27% of Williamsport’s GDP gain, but that’s just the direct contributions. The indirect contributions from construction (think well pads and new building spurred by royalties paid), transportation and utilities (think water trucks and local natural gas service), leasing (think equipment) and business services (think engineers and suppliers), add up to more than all the other contribution to GDP growth combined. Natural gas is driving Williamsport ahead, no matter how you look at it.
Then, there are those three Upstate New York cities. Ithaca, for example, which is the best of the lot, is but a two industry town. It depends totally on white collar spinoffs from academia (professional services), some trade and tourism (arts, entertainment, etc.). It has nothing else. It’s a completely distorted economy that didn’t do nearly as well as much more balanced Williamsport. And, that’s as good as it gets in Upstate New York. It’s but 56% of Williamsport’s growth rate.
Binghamton does significantly worse, with a GDP growth rate but 35% of Williamsport’s. Its economy is far more balanced than Ithaca’s but it is pure lackluster at best and Elmira is dropping off the map with a decline across most of the board. Now, think about the fact that both of Binghamton and Elmira has actually benefitted a bit by the spillover of some gas activity to those areas. At least one gas company has offices on the New York side of the board and some other companies serving the gas industry are also found there. Imagine where either city would be without the Binghamton hotel rooms rented by the industry or the water that’s purchased or the sand that’s delivered in New York for use in Pennsylvania.
It’s certainly not hard to imagine because the reality of the economic difference between those cities and Williamsport is so stark and the Williamsport Explorers are still beating the Ithaca Winers (and (Whiners) as well.