*UPDATE* Shale Delivers for Middle (and Middle-Class) America
UPDATE (5/03/2013; 9:43 A.M. ET):The Atlantic and Business Insider filed reports this week that make abundantly clear the profound economic impacts oil and natural gas development provides to middle class Americans. Reporting on the economic advancements in two states that couldn’t be more different – North Dakota and Pennsylvania – the reviews provided a succinct picture of how shale development is not only transforming U.S. energy prospects, but is also dramatically improving the quality of life for the nation’s blue collar workers.
The Atlantic reports the entire economic landscape has changed for many residents in the Peace Garden State:
The Bureau of Labor Statistics recently produced a breakdown of job growth during North Dakota’s oil rush, and it’s pretty remarkable. In counties where oil rigs have sprouted up to drill from the Bakken Shale Formation — a few of which are actually in Montana — employment grew by 35.9 percent from 2007 to 2011, from about 78,000 jobs to more than 105,000. But much as in Texas’s shale country, the impact on local job growth has actually been dwarfed by the impact on local income. Total wages more than doubled from $2.6 billion to $5.4 billion. Average pay jumped by more than half, from $33,040 to $50,553.
Blue-collar men suddenly finding high-paying work in the fields is a big part of the story. But jobs and paychecks have surged across industries.
While this story is compelling, it’s not unique. Business Insider also took a closer look at the economic benefits shale development has provided one formerly rural poor Pennsylvania county. According to reporters who visited the area, “lots of people [are] grateful for the infusion of commerce injected into a local economy that had stagnated.” From Business Insider:
The 35-year-old Susquehanna County, Penn. native was scraping by supplying construction contractors with cut bluestone when the gas industry arrived to his sleepy corner of Pennsylvania in 2009.
Four years later, Diaz now owns seven different companies, including a home furnishings manufacturer and a timber harvester — that bring in $50 million a year and employs 250 people.
By one count, county residents have taken in a total of $300 million in gas royalties.
Jay Agkinson, a lifelong county resident who runs Montrose’s Shell station, said morning fill-ups can sometimes resemble truck meets.
“A lot of people who never had money have money now,” he said.
In countless communities across the country, Americans are seeing their economic prospects transformed for the better thanks to the responsible development of the nation’s shale resources. That’s welcome news for thousands of blue collar Americans, many of whom have seen their incomes and opportunity stagnate and decline in recent years.
—Original post, February 20, 2013—
In the ongoing conversation over America’s abundance of natural gas, one thing is becoming very clear: The continued development of our nation’s oil and natural gas resources is helping advance our economy where it matters most – in the pocketbooks of middle class Americans.
In fact, a growing body of evidence highlights that oil and natural gas development is a key element in reaching the “North Star” that President Obama recently noted should be the goal of our nation’s economic policies; namely, a growing economy that creates good middle class jobs.
In 2011, the oil and natural gas industry provided $545 billion to the U.S. economy in the form of capital expenditures, wages and dividend payments. This supported nine percent of all new jobs that year, according to the World Economic Forum.
Such growth, in turn, is transforming entire regional economies. Take, for example, the city of Pittsburgh, Pa. This once reveled blue-collar city was a symbol of U.S. economic strength until the collapse of U.S. steel and manufacturing in the early 1980s. Thereafter, the city struggled to right its course, with only limited success. But now wages are rising, unemployment is falling and many are attributing this growth, at least in part, to a stronger economy supported by Marcellus Shale development.
Kurt Rankin, an economist and assistant vice president at the PNC Financial Services Group, sees Marcellus development as “providing the defining force for Pittsburgh’s local economy,” according to a recent feature by E&E News. Other experts have similarly observed that shale development is boosting wealth, increasing local spending and reversing a “brain drain” that has plagued the region for years.
Rankin has good reason for his optimism, too. Houston, Tex. has seen rapid growth as major energy Companies have relocated to, or increased their presence in, the Space City due to $120 billion worth of investments in refineries, pipelines and export terminals expected to be constructed along the Gulf Coast.
Similar expansions have been witnessed in smaller U.S. cities like Williamsport, Pa. This medium sized central Pennsylvania city, long known for hosting the Little League World Series, became the 7th fastest growing city in the United States in 2011 thanks to Marcellus Shale development.
Of course, these economic advancements haven’t just accrued in our nation’s metropolitan areas. In fact, they are most evident in areas where a majority of middle class Americans reside: our nation’s rural and suburban communities. This was noted in a recent USA TODAY story, which found that oil and natural gas development is increasing personal income in small towns across the nation, reversing a decade’s long trend and shifting significant wealth toward areas of the country that can use the boost. Specifically, the USA TODAY analysis noted these areas saw their incomes rise by 3.8 percent, driven by spending in the nation’s oil and gas fields.
But the story doesn’t end there. A San Antonio Express-News review of economic data supported by Eagle Ford Shale development noted that income in LaSalle County, Tex., rose by 31 percent since shale development began. In fact, the review found that counties hosting Eagle Ford development saw an average increase in per capita income of 13.62 percent between 2008 and 2011. These counties include Atascosa,Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson, and Zavala. For comparison, Texas saw an increase in per capita income of 1.3 percent over that time.
What’s making this rise possible is a significant increase in good paying jobs being provided by a growing domestic oil and natural gas industry. A recent independent review found that wages for the mining, oil and natural gas sector increased by 5.8 percent between the last quarters of 2011 and 2012, an amount greater than any 12-month period since 2006. Examining employment data from two states makes this phenomenon very clear. In Pennsylvania, Marcellus Shale development is directly supporting more than 30,000 jobs in the state. These jobs pay $89,116 per year, which exceeds the average compensation of all other Pennsylvania industries by $41,000 according to state data. According to the 2010 Census, this even exceeds the Keystone State’s average household income of $51,651.
A similar story is taking shape in Ohio, where Utica Shale development began ramping up in 2012. According to a recent state report, shale development is directly employing nearly 7,300 individuals who are earning an average wage of $74,000 a year. This figure exceeds the wages of all other Ohio industries by approximately $30,000.
What’s making this development even more profound is that at the same time shale development is increasing wages, it’s also decreasing expenses for most Americans. Wholesale electricity prices in the United States have dropped more than 50 percent since 2008 thanks to affordable natural gas supplies made possible by shale development. Another review by IHS-CERA found that lower natural gas prices are saving every American household an annual average of $926. All of this, and more, led the President to recently declare in the State of the Union, “We produce more natural gas than ever before — and nearly everyone’s energy bill is lower because of it.”
So, as it turns out, the President doesn’t need to look too far to find that North Star he referenced in the State of the Union Address. From providing millions of jobs, to increasing paychecks while decreasing expenses, our ability to develop our nation’s oil and natural gas resources seems to be the compass that is pointing to a stronger middle class.