The natural gas industry boosted economic growth last year in Western Pennsylvania, where gross domestic product increased at the fastest pace in five years, according to Commerce Department data released Wednesday.
The value of goods and services produced in the seven-county Pittsburgh region grew 2.9 percent in 2014, ranking the region 77th among 381 metro areas in terms of its growth rate. It was the biggest annual increase for Pittsburgh since 2010.
Mining, which includes natural gas extraction, remains a small part of the region’s economy but was by far the fastest growing sector, with a 29 percent increase in GDP despite falling natural gas prices late last year that crimped producers’ revenue.
“It’s still half the size of manufacturing in the Pittsburgh region, but its growth is certainly outstanding,” said Kurt Rankin, an economist at PNC Financial Services Group.
Energy producing regions outperformed other parts of the nation last year. Those with ties to the oil industry topped the list, led by Midland, Texas, with a 24.1 percent increase in GDP, followed by San Angelo, Texas (11.4) and Lake Charles, La. (10.3). Average growth overall in metro areas was 2.3 percent.
The communities with the strongest growth last year, however, could be set up for a big fall from the plunge in the price of oil, which has declined nearly 60 percent from last year and is below $50 per barrel.
“When these numbers come out next year, that’s going to be a very different story for the oil-producing areas,” Rankin said.
That doesn’t mean that Pittsburgh is going to take a nosedive, too, he said. Although the price of natural gas price has been cut in half since the beginning of 2014, it has not been as volatile as oil. And Pittsburgh’s balance of industries, in which financial and business services play a more dominant role, could absorb much of the impact from a slowdown in natural gas.
Mining contributed $6.6 billion, or 5.3 percent, to the total dollar value of goods and services produced in Pittsburgh last year. If growth for mining slowed to 10 percent and the other sectors stayed the same, Pittsburgh’s GDP growth would be on par with the national average at 2.3 percent, Rankin said.
“While natural resources development is a growing segment of Pittsburgh’s economy, it’s still small enough that a slowdown is not going to drag down the region’s economic health entirely,” Rankin said.
Pittsburgh wasn’t the only metro area that benefited from activity in the Marcellus shale last year. The natural gas industry in Wheeling accounted for most of the 9.5 percent increase in real GDP, the Commerce Department said.
Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or firstname.lastname@example.org.
This article was written by Chris Fleisher from The Pittsburgh Tribune-Review and was legally licensed through the NewsCred publisher network.