We need to energize Pennsylvania's economy


Now that the Amazon show is over, let's take full advantage of our world-class energy reserves

Pennsylvania’s legendary manufacturing-driven economy has overcome many challenges over the past 40 years. So much so that Pittsburgh and Philadelphia were attractive enough to be finalists in the Amazon HQ2 sweepstakes.

But while Amazon’s interest in Pennsylvania focused attention on the state’s strengths, our economy in the meantime has been underperforming. It needs infusions of investment, people and innovation.

The data underscore the situation:

  • Pennsylvania’s growth in gross domestic product is slow. From 2015 to 2016, U.S. GDP growth was 2.3 percent, while Pennsylvania saw an increase of only 0.1 percent. In 2017, Pennsylvania lagged again.
  • While Pennsylvania’s unemployment rate dropped to 4.3 percent in June — the lowest in 11 years — the decline was driven by a shrinking labor force.
  • Pennsylvania’s population is treading water. The U.S. Census Bureau estimates Pennsylvania added 18,000 people in 2017, after a drop of 0.1 percent in 2016. Populations are declining in 75 percent of Pennsylvania municipalities.

If you live in Philadelphia or Pittsburgh, you may enjoy downtowns with new residential housing, restaurants, breweries, entertainment and cultural features. However, these attention-grabbing amenities can’t hide the reality that our major cities, and towns across our rural landscape, face substantial infrastructure, transportation, education and social-service needs.

How can we generate the revenue needed to meet growing demands for community investment? Faster economic growth.

And how can we generate faster economic growth? Leverage our world-class natural-gas and natural-gas-liquids reserves.

In July 2017, McKinsey & Co. released “Forge the Future: Ideas for Action,” an econometric review of “the size of the prize” for Pennsylvania if it fully develops the substantial energy opportunities sitting right beneath our feet. We have the potential for significant growth in power generation, heating, petrochemical feedstocks and exports. This abundant, cost-effective energy source also opens the door for significant downstream economic growth, capitalizing on some of our region’s greatest assets, including technology leadership, innovation and skilled-workforce development.

McKinsey found that Pennsylvania’s energy-enabled economy has the potential to generate some $60 billion in GDP growth, about 100,000 jobs and billions in revenue to the state treasury.

But that sound you hear is the clock ticking on this historic opportunity. Pennsylvania has a very short window to fully exploit its massive natural-gas endowment. If we don’t make energy a priority and take action now, the potential for a new manufacturing revolution in Pennsylvania that creates thousands of family-sustaining jobs instead will be realized in other parts of the country and overseas.

To ensure we don’t miss out on this opportunity, McKinsey engaged Pennsylvania business and other leaders to come up with “Ideas for Action” in pursuit of an energy-fueled growth agenda. The report on this statewide brainstorm can be found at paforgethefuture.com and features the following initiatives:

  • Make energy a priority: With billions in potential economic growth and capital investment in play, our state government should have a Cabinet-level executive with the staff and funding needed to lead this effort.
  • Review and reform tax policy and incentives: Federal tax reform has driven business growth and investment — evident in increasing U.S. GDP — so let’s review and revise Pennsylvania tax policy to drive growth in energy and manufacturing.
  • Position Pennsylvania as the leader of the Fourth Industrial Revolution — which will be driven by automation and artificial intelligence — by harnassing and coordinating the efforts of state and local governments, businesses and academia. Pennsylvania has become a center of technology with cutting-edge innovations in artificial intelligence and robotics that are vital in developing advanced manufacturing, big data and smart materials. We also have an organized labor force that is ready to train the technology and manufacturing workers of tomorrow.

Now that Amazon has decided to split its highly hyped, 50,000-job HQ2 betweeen New York and Virginia, it’s time for Pennsylvania to focus on delivering 100,000 new jobs based on its energy resources.

We hear about the need to get a four-year college degree, but some energy-industry jobs pay six-figure salaries without one. We hear about the potential risks of having chemical companies and pipelines nearby, but not so much about how advanced technologies are being used to protect our environment. We see reports of college graduates moving out of Pennsylvania — an issue we must address — but hear nothing about the plentiful middle-class jobs that can be created by an energy-enabled renaissance in fields such as petrochemicals, advanced manufacturing and advanced materials.

We have clean, affordable energy and manufacturing feedstock in Pennsylvania and the innovation and technology to continuously advance our economic and environmental interests. We can use our world-class natural-gas reserves to break free of the slow- or no-growth status quo and create new opportunities for Pennsylvanians. “Forge the Future: Ideas for Action” is a blueprint. Now we must act on it to build a more prosperous future for all Pennsylvanians.

Morgan O’Brien is president and CEO of Peoples Natural Gas. Stacey Olson is president of Chevron Appalachia.