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UA Study: Shale play impact $17.9 billion Saturday, Mar 15, 2008 By Roby Brock Over the next five years, the Fayetteville Shale play could have an overall economic impact on Arkansas of $17.9 billion, create more than 11,000 new jobs and pump $1.8 billion in new taxes into the state, according to a new University of Arkansas analysis. About $150 million in local sales and property taxes could also be generated by the natural gas industry investments in Arkansas. Kathy Deck, director for the UA Walton College Center for Business and Economic Research, released the results of its latest study of the Fayetteville Shale play, which estimates the impact that the unconventional natural gas play will have on Arkansas. Two years ago, the economic center released a report that estimated the economic impact of the shale play to be $5.5 billion on the state from 2005 through 2008. Deck surveyed 80 companies involved the play and asked them to consider the effects of a hypothetical 5 percent severance tax with no exemptions or reductions. Under those circumstances, Deck said that a 5 percent flat severance tax could reduce the economic impact in the shale play over the five year period by 13 percent to $15.5 billion. Employment could fall to 8,677 under that scenario, according to those polled. Deck also added that some companies did report that they would withdraw operations in Arkansas under a severance tax increase. January housing numbers show further decline The Arkansas Realtors Association January home sales report shows more of the same for the state's housing market. Statewide home sales tumbled 26.6 percent in January 2008 compared to January 2007. Of the markets tracked by the realtors' group - which includes all major metro areas - there were 1,470 home sales in January 2008 versus 2,002 in the previous year. Statewide average home prices continued to appreciate slightly. For the full state, home prices grew by one percent in January compared to last year. The average price of a home settled at $149,091. Little Rock lands $100 million Indain pipe maker Little Rock has landed another major manufacturer and the second one with Indian connections in less than a year. Gov. Mike Beebe and Central Arkansas economic leaders welcomed Man Industries Ltd. of India, a global manufacturer of large diameter carbon steel line pipes for the gas and oil transmission industry. Man will build a $100 million manufacturing plant and hire up to 250 workers over the next year. The company will locate near the Little Rock Port Authority and the complex will serve as Man's headquarters for North America and South America. Dillard's to close two out-of-state stores Dillard's Department Stores has laid off up to 10 percent of its information technology work force of nearly 500 workers at the company's headquarters in Little Rock, sources told Talk Business. Employees were told that the main reason for the layoffs was to cut costs. Additionally, two mall stores in Colorado and Virginia will be closed. Dillard's spokeswoman Julie Bull said the company did not discuss personnel matters. Dillard's latest monthly sales numbers were down by 2 percent, part of a recurring trend among the mall retailer's revenues over the past two years. In its most recent quarter, Dillard's posted an $11.3 million loss. Biofuel work force funds headed to Helena The Phillips Community College of the University of Arkansas in Helena has been awarded a $1.98 million grant from the U.S. Department of Labor for work force training in the biofuel industry. The funding is part of the Community-Based Job Training Grants Initiative designed to help community colleges equip workers with the skills needed by growing local industries. The grant will allow Phillips Community College to lead a strategic partnership to train at least 550 workers for jobs in the renewable energy industry. In the Arkansas Delta, six bio-refineries are in production or under construction. Unemployment rate inches up Arkansas' January unemployment rate climbed one-tenth of 1 percent to 5.6 percent, well above the national average of 4.9 percent. One year ago, the state's jobless rate stood at 5.3 percent. Severance tax details revealed Gov. Mike Beebe disclosed details of his negotiations with natural gas companies to alter the severance tax. Terms of the agreement include: -A base rate of 5 percent of gas-sale proceeds received by the producer. -A reduced rate of 1.5 percent for the first 36 months of production on high cost wells. -A reduced rate of 1.5 percent for the first 24 months of production on other wells. -A reduced rate of 1.25 percent for marginal gas wells that do not meet minimum production thresholds. Royalty owners will receive the same deductions as production companies. The agreement would take effect on January 1, 2009 if the Governor can muster enough votes to call a special session to enact the legislation. Tourism spending tops $5.4 billion in 2007 Tourism in Arkansas is booming, according to the state's Parks and Tourism Department. At the Governor's conference on tourism, which kicked off Monday in Rogers, state officials reported that more than 30 million visitors came to Arkansas in 2007, spending $5.4 billion in the process. The agency also disclosed that it is hiring Los Angeles-based Economic Research Associates and Longwoods International, based in Canada, to conduct strategy and consumer research for six months to reassess the state's efforts to promote Arkansas' natural beauty, attractions and value. The two firms have internationally renowned reputations, having conducted promotional campaigns for clients such Disney, Busch Gardens, New Orleans, Hawaii and New York. ------- Roby Brock, a freelance journalist based in Little Rock, writes weekly for the Arkansas News Bureau. His weekly television program airs at 10 p.m. Sundays in Central and Northwest Arkansas. His e-mail address is roby@talkbusiness.net; his Web site address is www.talkbusiness.net. |
