Six-state study finds jobs impact of fracking exaggerated by industry and supporters
- November 21, 2013
For immediate release Contacts: Amanda Woodrum, 216.361.9801 or Chris Lilienthal, 717.255.7156
Shale drilling, or fracking, has created jobs, particularly in Pennsylvania and West Virginia, and cushioned some drilling-intensive areas in those states from the worst effects of the recession and the weak recovery. As this report documents, however, the number of shale jobs created is far below industry claims and remains a small share of overall employment. fracking
Drilling in the six states that span the Marcellus and Utica Shale formations has produced far fewer new jobs than the industry and its supporters claim, according to a report released today by the Multi-State Shale Research Collaborative, a group of state-level research organizations tracking the impacts of shale drilling.
“Industry supporters have exaggerated the jobs impact in order to minimize or avoid altogether taxation, regulation, and even careful examination of shale drilling,” said Frank Mauro, executive director of the Fiscal Policy Institute in New York.
Shale drilling has created jobs, particularly in Pennsylvania and West Virginia, and cushioned some drilling-intensive areas in those states from the worst effects of the Great Recession and the weak recovery. As this report documents, however, the number of shale jobs created is far below industry claims and remains a small share of overall employment. fracking
“This report shows very few shale-related jobs created in Ohio,” said Amanda Woodrum, energy researcher at Policy Matters Ohio. “If Pennsylvania and West Virginia are indicators of what we can expect in Ohio, employment in Ohio’s shale industry will continue to be very modest.”
The Marcellus and Utica shale formations span six states: New York, Ohio, Pennsylvania, West Virginia, Maryland, and Virginia. Natural gas development in these six states was fueled by high commodity prices from 2000 to 2008. As prices have declined more recently, gas drilling activity has slowed while development of higher-priced oil has accelerated.
“Shale drilling has made little difference in job growth in any of the six states we studied,” said Stephen Herzenberg, executive director of the Keystone Research Center in Pennsylvania. “We know this because we now have data on what happened, not what industry supporters hoped would happen.”
Recent trends are consistent with the boom and bust pattern that has characterized extractive industries for decades. It also points to the need for state and local policymakers to collaborate to enact policies that serve the public interest.
“Counting shale jobs accurately will help state and local governments plan for impacts and removes the hype intended to discourage unbiased scrutiny of the industry’s pluses and minuses,” said Herzenberg. “Our report recommends a six-state commission that establishes a consensus method to track jobs.”
Key findings from the report include:
- While shale-related employment growth has made a positive contribution to job growth, the number of jobs created is far below industry claims and remains a small share of overall employment in the region.
- Between 2005 and 2012, fewer than four new direct shale-related jobs have been created for each new well drilled, much less than estimates as high as 31 direct jobs per well in some industry-financed studies.
- Region-wide, shale-related employment accounts for just one out of every 795 jobs. By contrast, education and health sectors account for one out of every 6 jobs.
- Job growth in the industry has been greatest (as a share of total employment) in West Virginia. Still, shale-related employment is less than 1 percent of total West Virginia employment and less than half a percent of total employment in all the other states.
- Many of the core extraction jobs existed before the emergence of hydrofracking.
- Together, Pennsylvania, Ohio, and West Virginia had 38 percent of all producing wells in the country in 1990 and 32 percent in 2000.
- Some counties with a long history of mineral extraction have experienced a shift in employment from coal to shale extraction.
- Industry employment projections have been overstated.
- Some industry supporters have equated “new hires” with “new jobs” and attributed ancillary job figures to shale drilling even when they have nothing to do with drilling.
- Industry-funded studies have used questionable assumption in economic modeling to inflate the number of jobs created in related supply chain industries (indirect jobs) as well as those created by the spending of income earned from the industry or its suppliers (induced jobs).
- Drilling is highly sensitive to price fluctuations, which means that job gains may not be lasting.
- In some counties, employment gains have been reversed as drilling activity shifted to more lucrative oil shale fields in Ohio and North Dakota.
- Direct shale-related employment across the six-state Marcellus/Utica region fell over the last 12 months for which there are data — the first quarter 2012 to the first quarter 2013.
“While shale development has been important to West Virginia’s ongoing economic recovery, it is less than 1 percent of the state’s employment mix,” said Ted Boettner, Executive Director of the West Virginia Center on Budget & Policy. “This means policymakers need to make the important public investments in higher education and workforce development that will diversify our economy and make it stronger over the long-term.”Download this press release Read the full report at www.multistateshale.org.
Amanda Woodrum’s comments from the Nov. 21, 2013 media call
A holistic economic assessment of shale-industry development requires us to look at both costs and benefits. The next series of reports from the Multi-state Shale Research Collaborative will look more closely at some of the costs associated with shale-industry development. This report shows that the benefits have been exaggerated.
Shale drilling has definitely helped some small rural communities in Ohio – like those in Carroll County – get through the great recession.
Shale-related employment in Ohio on the whole, however, has been relatively minor – fewer than 3,000 jobs, less that one-tenth of 1 percent of Ohio’s total employment. Ohio has more people employed in the clean energy industry. These data don’t distinguish between jobs given to local residents and those that go to out-of-state workers – some of these 3,000 jobs aren’t even going to Ohio residents.
This report confirms what we’ve already learned in Ohio from earlier research. What is interesting about this report is the modest level of employment in Pennsylvania and West Virginia, states much farther along in shale-industry development.
If West Virginia and Pennsylvania serve as indicators of what we can expect in Ohio, we need to lower our expectations. This report suggests that the Ohio State University study predicting a total of approximately 20,000 jobs in the next four years – which is still less than 1 percent of total employment – is in the ballpark of where Ohio is likely going.
This relatively modest level of expected employment is not worth throwing all caution to the wind and ignoring the costs of industry development.
Smart regulations are important, and continued investment in alternative forms of energy still makes sense.
The Multi-State Shale Research Collaborative brings together independent, nonpartisan research and policy organizations in New York, Ohio, Pennsylvania, Virginia, and West Virginia to monitor employment trends and the community impacts of energy extraction in the Marcellus and Utica Shale. Member organizations include the Fiscal Policy Institute of New York, Policy Matters Ohio, Keystone Research Center/Pennsylvania Budget and Policy Center, Commonwealth Institute for Fiscal Analysis in Virginia, and West Virginia Center on Budget and Policy. View the full report at www.multistateshale.org.