New Report: Economic Benefits of Shale Stretch for Hundreds of Miles

Researchers from Dartmouth College recently released a new study that looked at the economic ripple effect of shale development. The study, Geographic Dispersion of Economic Evidence from the Fracking Revolution naturally found significant economic development in producing counties, but what’s even more interesting is that the economic impacts were felt throughout the entire region. From the report:

Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs.” (emphasis added)

The report’s sample consisted of an eight year timeline with 3,082 counties and 24,646 county-year observations for each industry. This allowed the researchers to conclude that new oil and gas extraction has led to an increase in aggregate U.S. employment of 735,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession. Shale development also boosted gross domestic product throughout metropolitan areas across the U.S. According to the report:

“Employment in the mining industry grew by 60 percent during a period when overall US unemployment reached 10 percent.” (emphasis added)

The report also noted an economic impact spillover effect from shale development into other industries that support development. From the report:

Roughly 40 percent of the income increase is in industries not directly related to oil and gas extraction such as finance, leisure, hospitality, and local government. Of the $66,000 increase in local wages, $39,000 are wage payments to oil and gas industry workers, including trucking, and another $27,000 are wage spillovers to workers in other industries.” (emphasis added)

It’s clear that shale development has been a huge economic driver across the U.S. and because of more prolific shale formations some counties saw huge increases in economic development. According to the report:

The top five percent of counties (about 37 counties) saw production increases in excess of $290,000 per capita associated with a 23 percent increase in employment and a $19,000 increase in wages per capita.

Whether your county was in the top five percent of counties, the bottom five percent, or doesn’t even have any shale development, everyone across the country is benefitting. And, with more American homes having access to affordable energy, gas prices at an all-time low since 2009, and heating costs going down for the upcoming winter season, Americans have are getting a boost just in time for the holidays.


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