Policies that take advantage of the U.S. fossil fuel energy abundance — natural gas, oil and coal — could spark “widespread employment growth” in many areas of the country, according to new research by the Manhattan Institute.

Senior Fellow Mark P. Mills and research associate Yevgenly Feyman discussed the impact of domestic energy on reducing the unemployment rate in a new paper.

IHS Inc. earlier this week published a report that focused on unconventional gas and oil, indicating that the U.S. energy outlook has “fundamentally changed” because of unconventional gas and oil production, which could generate jobs, economic growth and government revenues (see Daily GPI, Oct. 25).

Mills and Feyman examined all of the domestic fossil fuels to determine their impact.

“Energy production has emerged as a key issue in the presidential campaign, but not in a way familiar to most Americans,” they wrote. “Rather than a focus on shortages or on alternatives to hydrocarbons — oil, gas, and coal — talk has turned to the potential benefits from an energy production boom, and how best to encourage an even bigger boom.”

Reasons for the shift are obvious. “The nation is in desperate need of jobs. And technology has unleashed a surprising increase in domestic oil and gas output.” In addition to the natural gas glut, “the 40-year decline in domestic oil production has been reversed. Add to this the rush to export abundant high-quality coal to soaring world demand and not only are lower prices now in play, but energy independence is in sight for the first time.”

According to the institute, nearly 10 million Americans already are employed directly or indirectly in businesses associated with natural gas, oil and coal production. The jobs are “widely distributed across the nation,” and 16 states have more than 150,000 people employed in hydrocarbon-related activities. By accelerating domestic energy output, “at least three to four million jobs” could be created in the “immediate future,” said Mills and his colleague.

More than 500,000 jobs could be created in Ohio, Pennsylvania, Florida, Michigan and Colorado, swing states in the upcoming presidential election, they noted. “New employment from hydrocarbons could amount to one-fifth to three-fourths of the jobs needed by people in over 20 states counted as unemployed or underemployed, including Wisconsin, Colorado, Iowa, Ohio and Pennsylvania,” they wrote.

Gas and oil production and employment “have grown from marginal or near zero in certain parts of North Dakota, Ohio, and Pennsylvania, for example, to become major forces in only a few years. The same could happen in many states, not just Texas, Oklahoma, and Colorado, but also in California and New York.”

However, the production gains may not last and could be at risk “if new restrictions are imposed on the industry,” from several fronts: liquefied natural gas export delays, opposition for expanding coal exports, pipeline and refinery opposition, as well as the “threat of redundant federal regulations on the technology of hydraulic fracturing.”

Hydrocarbon industry job gains won’t erase all of the U.S. job deficit but they “represent the largest single opportunity for near-term jobs, and one that requires no federal spending,” wrote the duo. “The broad economic benefits that come from privately financed expansions in domestic production would generate at least $2 trillion for the country. Put another way, each hydrocarbon job created brings an average societal benefit of $500,000 per job.”

The researchers estimated that half of all existing hydrocarbon jobs — and most of the recent increases in gas and oil production — come from 18,000 small and mid-size companies with the expansion “on private and state lands, without federal stimulus and despite regulatory headwinds.”

Longer term, new technologies across all sectors are bound to revitalize the U.S. economy and create a new types of employment, said Mills and Feyman. “But the depth and magnitude of job destruction from the Great Recession means that creating jobs in the near term is vital.”

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