Backing claims of the economic benefits of shale drilling, a recent study conducted by Dartmouth College researchers concluded that unconventional oil and gas development has paid dividends for the surrounding regions.
The study, “Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution,” found that the impact was especially noticeable when measured beyond county borders.
Looking at data collected from active oil and gas states from 2005-2012, researchers found that every $1 million in new production generated $243,000 in wages, $117,000 in royalties and 2.49 jobs within a 100-mile radius.
At the county level, every $1 million in new production resulted in an additional $66,000 in wages, $61,000 in royalty payments and 0.78 new jobs. About $27,000 in new wages within the county reflected “spillovers to workers in other industries,” according to the study.
“The effects grow larger as we widen the geographic area being examined,” researchers said. “The state-level impact on jobs and income is approximately five times as large as the immediate county effect with most of the impact happening within 100 miles of the drilling sites.
“Overall, we conclude that 36% of the value of new production shows up in households within commuting distance of the drilling locations.”
The researchers said that a regional analysis provides “insight into the aggregate impact of the fracking boom.”
“The county may not be the ideal level of observation because workers and landowners may be located in counties adjacent to where new production is occurring,” the researchers said. “By examining the impact of new production at increasing distances we can track the propagation of the shocks over space. This spatial analysis is important because we are interested in how fracking impacts the entire region, not just the immediate county. This is particularly important since substantial new fracking activity occurs in sparsely populated counties.”
Researchers estimated that new oil and gas extraction accounted for 725,000 U.S. jobs from 2005-2012.
“Assuming no displacement from other employment, this suggests that the fracking boom lowered aggregate U.S. unemployment by 0.5% during the Great Recession,” they said.
The study analyzed income and employment data from the Bureau of Labor Statistics, income data from the Internal Revenue Service and oil and natural gas production figures from drillinginfo.com. Researchers looked at 3,000 counties across California, Colorado, Pennsylvania, Kansas, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Utah, Texas, West Virginia and Wyoming.