California

A Wealth Transfer We Can Get Behind

*** Cross-posted on EnergyInDepth.org 

From reviving local steel mills in blue collar communities to supporting family businesses, responsible shale development is transforming and reshaping our economy for the better.  And according to an analysis by USA TODAY, oil and natural gas development is also rapidly increasing personal income in small towns – reversing a decade’s long trend and shifting significant wealth toward rural areas of the country that certainly can use the boost.

To reach this conclusion, USA TODAY examined Bureau of Economic Analysis data from 2007 to 2011. Over this period, individuals in metropolitan areas saw their income decrease, on average, by 3.5 percent. Their rural counterparts, meanwhile, saw their incomes rise by 3.8 percent – thanks in part to oil and gas development in the Southwest, Mountain States and Midcontinent.

Bill Connors, President of the Boise Metro Area Chamber of Commerce, summed up the situation nicely: “Give us a little shale, and we’ll show some pretty good income growth, too.”

The trend is especially prevalent when you take a closer look at statistics from North Dakota.  According to the review, six of the top 10 counties in the United States experiencing wage growth right now are located above the Bakken Shale, which has also helped that state achieve a nation-leading three percent unemployment rate – essentially, full-employment. In fact, jobs are so plentiful in North Dakota that fast food restaurants in towns like Williston are paying more than $15/hour and offering signing bonuses to attract new staff.

The juxtaposition between income levels in rural and metropolitan areas is especially striking.  USA TODAY found that Sutton County, Texas – a major oil producing county with a population of only about 4,000 – saw average wages and benefits double over the time period studied, with individuals receiving an average salary of $115,775 during 2011.  Only Manhattan, New York – the financial center of the United States and arguably the world – was able to eclipse this level of compensation.

If this story sounds familiar, it should.  Last year, a study by Sentier Research found that seven of the top 10 states that experienced increases in household income during the Great Recession were states where oil and natural gas development is a significant contributor to the economy.

But shale development isn’t just increasing pre-existing wages; it’s also creating millions of new jobs.  According to the World Economic Forum, the oil and natural gas industry created nearly one in 10 of all new jobs in the United States last year.  This, in turn, translates to significant positive impacts in communities where development is taking place.  In 2011, for example, Pennsylvania was home to the 7th fastest growing metropolitan area in the nation (Williamsport, PA; 7.8 percent growth) and  also two of the top ten growing counties in the United States, where employment grew by 4.3 percent (Washington County) and 4.2 percent (Butler County).

These significant benefits, combined with residents gaining increased understanding of the safe practices of America’s oil and natural gas industry, are also a big reason for the amazing level of support for increased energy development.  Need proof? Polling conducted after the recent presidential election found that a strong majority of voters, 94 percent of those surveyed, believe expanded oil and natural gas development is important for our nation’s economic and energy security.

Is there any other issue – absent a call for more hilarious cat videos on YouTube – for which Americans would voice support even approaching 94 percent?

With reports like these it’s understandable why residents in a state like New York – which is home to many struggling small towns above the Marcellus Shale – are becoming increasingly frustrated by Governor Cuomo’s repeated delays in approving shale development. Little wonder, too, why voters in that state took their frustration to the ballot box and voted against candidates calling for more delays or even outright bans. Also worth mentioning: the Empire State hosts the nation’s 10th highest unemployment rate and one of the nation’s highest property tax burdens.

So, in a nutshell, the safe development of America’s shale resources is not only helping to make the United States more economically competitive, it’s also reviving the same small businesses and communities that continue to make our nation great.  The next time activists try to block development, maybe we should ask them a simple question: Whose side are you really on?

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