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Wednesday, December 31, 2014

New Study Adds to Debate Over How Many Jobs Are Actually Created by Shale Drilling

From Forbes:
How many jobs will the North American oil and gas boom create? Environmental concerns certainly loom large in the public’s mind, but in the recent economic environment creating jobs remains a pressing concern for policy makers and political constituents. Newspaper headlines like, “Boom in Energy Spurs Industry in the Rust Belt,” “North Dakota tries to woo workers for empty jobs” and “Rent in Williston, N.D. tops averages in New York City and Los Angeles” are part of a narrative that the shale revolution will be a panacea for the United States’ labor market. Recent research at Rice University’s Baker Institute for Public Policy shows that shale may not be quite the national job-creating juggernaut that boosters claim it will be. This means that policy makers must not be complacent about job-creation and simply rely on fracking to lead us out of the underemployment woods. In particular, state and local policy makers concerned about creating jobs should promote intelligent policies that promote drilling in a responsible way, encourage individuals and firms to spend locally where fracking takes place, and pursue an “all of the above” job-creation strategy. 
Cumulative employment growth relative to the national average since 2008 has been much higher for most oil and gas-producing states than for the rest of the nation (see Figure 1 in the working paper). This has triggered much rhetoric, but the question remains, “How many jobs will additional upstream drilling activity actually create for each state?” In a recent working paper at the Center for Energy Studies at Rice University’s Baker Institute, the answer to this question is given explicit attention. The paper finds a robust, positive, statistical association between state-employment growth and growth in drilling activity. This is good news for states with shale resources. Nevertheless, the job-creation multipliers (the number of jobs created directly and indirectly following an increase in upstream investment) in the paper are substantially less than those implied by industry reports. (For example, IHS’s national study or another on the Marcellus.)
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