New Report Examines Shale Drilling Impact

November 21, 2013. 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 by the Multi-State Shale Research Collaborative, a group of research organizations tracking the impacts of shale drilling that includes the Fiscal Policy Institute.

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.

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.

Below are the key findings from the new report:

  • While shale-related employment 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, less 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 six 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.

Press-Release

Full Report

Visit the  Multi-State Shale Research Collaborative web site for more information, reports, and resources.