Economic impact of fracking strong at regional, state levels, Dartmouth researchers say
The economic impacts from fracking extend far beyond the county where drilling activity is happening, according to a report.
Dartmouth College researchers, who produced the report for the National Bureau of Economic Research, found that the impact on wages and employment was many times larger at the regional and state levels than in the county where drilling occurred.
The findings underscore the widespread economic benefits to areas that rode the boost from fracking activity to a faster post-recession recovery.
“It's surprising just how much of the revenue, how large the benefits are in the county and (within) 100 miles of the county,” said Bruce Sacerdote, a professor of economics at Dartmouth and one of the report's co-authors.
Researchers studied data from more than 3,000 counties across the nation from 2005 to 2012. They found that $1 million of new production generated $66,000 in additional wages for oil and gas workers and service companies, $61,000 in royalty payments and 0.78 new jobs in the county where the drilling was taking place.
There was even greater economic spillover to surrounding communities. Within a 100-mile radius, $1 million of production was associated with wage increases of $243,000, $117,000 in royalties and 2.49 jobs, an impact about three times as large as at the county level.
The industry buffered energy-producing states from greater economic shocks during the Great Recession, Sacerdote said. Between 2005 and 2012, there was a nationwide gain of 725,000 jobs associated with new oil and gas extraction, and there were other benefits to states from having access to cheaper energy, he said.
The oil and gas industry touted the results of the study as confirming the significance of the economic impact of shale development.
“Indeed, every corner of the commonwealth is benefiting from the growth and success of this industry, as host counties and communities nearly 100 miles from well sites are seeing meaningful benefits,” said Erica Clayton Wright, spokeswoman for the Marcellus Shale Coalition, an industry trade group based in North Fayette.
Mike Helbing, staff attorney for the environmental advocacy group PennFuture, said the report failed to take into account long-term environmental effects, nor did it address what will happen when the fracking boom ends and jobs move to another location.
To be sure, the local county would bear the brunt of those environmental costs, Sacerdote said, which is why local governments must retain some control over how drilling is conducted. But the study suggests the state's economic interests should be considered as well.
“You can understand why a single county might be tempted to ban the activity,” he said. “But at the state level, the state wishes this activity were occurring. There are significant benefits at the county, but there are many more benefits at the state level.”
Chris Fleisher and Tory N. Parrish are staff writers for Trib Total Media. Fleisher can be reached at 412-320-7854 or firstname.lastname@example.org. Parrish can be reached at 412-380-5662 or email@example.com.