How important has the shale energy boom been to jobs and the economy? Very important. Mark Mills of the Manhattan Institute writes in a new report that the oil and natural gas sector has “provided a greater single boost to the U.S. economy than any other sector.” He adds:
The $300–$400 billion overall annual economic gain from the oil & gas boom has been greater than the average annual GDP growth of $200–$300 billion in recent years—in other words, the economy would have continued in recession if it were not for the unplanned expansion of the oil & gas sector.
On jobs, Mills found impressive growth nationwide as well as in states experiencing the shale boom up close and personal.
These four charts from Mills’ report show how the shale energy boom has been the job creation story of our economic recovery.
1. Post-Recession Job Recovery Hasn’t Been Good
Let’s start with some context. The Great Recession gave us a deep job hole to dig out of, and nearly five years after the recession employment levels still haven’t recovered. Over the last twelve months the economy has created an average of only 187,000 jobs per month. At that pace, according to the Brookings Institution’s Jobs Gap calculator, it will take five years to return to pre-recession employment levels.
2. Soaring Growth in Oil and Natural Gas Production
In the last few years, the combination of hydraulic fracturing, horizontal drilling, and sophisticated information technology—smart drilling--has made previously unreachable shale oil and natural gas fields accessible to development. Oil and natural gas production has increased so much that the United States will become the world’s top oil-producing country by 2015 according to the International Energy Agency.
3. Oil and Gas Job Growth Outpaces Economy
Soaring oil and natural gas production has led to energy companies hiring more workers. The number of oil and natural gas jobs have increased by 40% since the beginning of the recession.
But that job growth isn’t limited to jobs directly in the energy sector. The shale energy boom also means the creation of jobs in other sectors of the economy. Mills writes,
For every direct job, there are, on average, three jobs created in industries such as housing, retail, education, health care, food services, manufacturing, and construction (the last was one of the hardest-hit industries during the Great Recession—and still lagging).
For instance, according to Fox News, the abundance of natural gas from shale will lead to the construction of new facilities along the Gulf Coast to liquefy natural gas and mean more construction jobs:
[T]he region between Brownsville, Texas, and Pascagoula, Mississippi, could see labor demand surge from 86.1 million required man-hours in 2013 to 134.3 million in 2015, or an increase of more than 55 percent.
In just two years, the number of pipe fitters, welders, electricians and other skilled workers in the Gulf Coast will grow from roughly 62,000 to more than 103,000, driven in part by receipt and export terminals now under development by companies like Sempra Energy in Louisiana and Freeport LNG in Texas.
Also because of plentiful natural gas, the American Chemistry Council announced that “potential U.S. chemical industry investment has now topped $100 billion” with “more than half of the investment dollars come from firms based outside the U.S.” which will lead to high-paying jobs. In addition, access to more affordable energy is spurring job creation by helping to revitalize America’s manufacturing base.
4. Impressive Job Growth Seen in Shale Energy Boom States
As you can see on the left, North Dakota and Texas have seen impressive job gains from the shale energy boom. Mills specifically looks at Texas’ Eagle Ford Shale:
In the 23 counties atop the Eagle Ford shale, average wages for all citizens have grown by 14.6 percent annually since 2005, compared with the 6.8 and 6.3 percent average for Texas and the U.S., respectively, over the same period. The top five counties in the Eagle Ford shale have experienced an average 63 percent annual rate of wage growth.
If you look on the right, you’ll see that other states where shale energy development is taking place are also seeing faster than average job growth. Take Pennsylvania. Mills writes:
The Marcellus shale fields in Pennsylvania were responsible for enabling statewide double-digit job growth in 2010 and 2011 and now account for more than one-fifth of that state’s manufacturing jobs. For every $1 that the Marcellus industry spends in the state, $1.90 of total economic output is generated.
As you can see, the shale boom has been a successful jobs generator. Let’s not mess it up. Federal regulators must avoid duplicative regulations on hydraulic fracturing, and open up more federal land for development. In addition, regulators should permit greater oil and natural gas exports so America can fuel an energy-hungry global economy. Policymakers should not erect barriers to energy development but instead lower them to foster the boom. With the right policies in place there’s more jobs waiting to be created.
You can read more about policy suggestions on shale energy as well as all aspects of U.S. energy policy in the Institute for 21st Century Energy’s Energy Works for US report.