The construction of a petrochemical plant in Western Pennsylvania, with help from the largest tax credit in state history, has not stopped the long-term economic decline in Beaver County, a new report has found.
“[B]y nearly every measure of economic activity, today Beaver County is worse off than it was before the Shell plant was announced in 2012,” according to the report, from the Ohio River Valley Institute, a left-leaning think tank that focuses on clean energy.
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The report looked at data like population, gross domestic product and employment. All those numbers declined in Beaver County between 2012, when the project was announced, and 2023, while the overall numbers in Pennsylvania and the rest of the U.S. increased.
“What the data reveal is that Shell’s claim that the plant would be a “windfall” to the economy has utterly failed to materialize,” the report said.
Shell’s Beaver County ethane cracker began operations in 2022, with a $1.65 billion state tax credit. More than 8,500 people, many from out of state, crowded into the area to work on the plant at peak construction.
The report found that the construction period led to a rise in population and economic activity in the county.
“You’ve got a lot of workers coming into Beaver County to build that plant, and for a few years, that actually does provide a boost,” said Eric de Place, a senior research fellow at ORVI and co-author on the study.
But those employment and population numbers fell off after 2020, the year of COVID, and are now lower than they were in the 2010s.
“Pennsylvania and the United States have continued to see GDP rise pretty steadily over that time…but Beaver County didn’t,” de Place said.
“The backers of this project promised that what would happen is that working age people would move to Beaver County and they would bring their families with them,” he said. “That’s not what the population data appears to show.”
The plant currently employs nearly 500 people, and has paid “$52 million in taxes, royalties, and fees in Pennsylvania during the last three years,” said Shell spokesperson Natalie Gunnell in a statement.
“Shell takes an active role in the communities where we work and live,” she said. “Over the life of the project, and now the constructed facility, we have made it a priority to work closely with communities and municipalities to manage social impacts and enhance the benefits we bring.”
The report was criticized by Jack Manning, a Beaver County commissioner. He said that it compares the county, which has suffered from the loss of steel jobs beginning in the 1970s, to more affluent parts of Pennsylvania, like Philadelphia’s suburbs. When compared to other counties in western Pennsylvania, he says Beaver County is doing well.
“Comparing southwest [Pennsylvania] to anything east of Harrisburg is ridiculous,” Manning said in an email. “Shell put us on the map with the largest construction project to be built in Pennsylvania history since WWII.”
“They’ve only been up and running at a steady state for a little over a year. This is a long-term process,” he said. “[W]e have seen more private, state and federal investments flow into Beaver County than we’ve seen in decades.”
Jeremy Weber, an economist at the University of Pittsburgh, said the report tries to do something that’s very difficult: tease out what impact policies like a tax credit have on overall economic activity.
But he doubted whether Beaver County should be compared to the state on the whole. A better comparison would be other counties in similar economic and demographic conditions.
“If you’re comparing two places… you really need them to be similar,” Webber said. “If you compare two places that are on different trajectories well before the plant, it’s just very unclear what you’re learning, other than, ‘These places are different.’ They were different before, and they remain different after.”
Chris Briem, a regional economist at the University of Pittsburgh, said the report was largely correct that a boom in petrochemical manufacturing surrounding the plant has not, to date, materialized, as was promised in the buildup to the plant.
“Certainly, the project has not turned around the economic trends in Beaver County yet,” Briem said. “Would things have been worse without it? Possibly.”
Briem said it might be too early to say what the plant’s long-term economic impact will be.
“But certainly, anyone who expected that type of secondary impact [to the economy], in the near term, this has proven not to be the case.”
(Ohio River Valley Institute is funded by the Heinz Endowments, which also funds The Allegheny Front.)
