Policy Documents

Research & Commentary: The Benefits of Shale Energy on Other Industries

March 28, 2013

As advancements in hydraulic fracturing and horizontal drilling continue to revolutionize the nation’s energy outlook, it’s important to consider the economic ripple effect expanding shale energy has had on industries outside the energy sector.

Research from Deutsche Bank found North Dakota’s Bakken shale formation created 115,000 U.S. mining jobs over the past five years. For every one of those 115,000 jobs, an additional three jobs were created in construction, retail, or food service industries.

Shale gas is also expected to fuel a resurgence in U.S. manufacturing, greatly increasing investment opportunities and job growth. According to the MIT Technology Review, “Overall, cheaper chemicals, cheaper steel, and cheaper transportation could make the U.S. a far more attractive place for a wide range of industries.”

States such as Pennsylvania and Ohio, home to the Marcellus and Utica shale formations, have also been seeing banks benefit from increases in commercial loans and deposits, law firms expand their energy practices, and dozens of colleges add new staff and coursework related to the natural gas industry. As the Utica shale enters its early stages of development in northeast Ohio, nearly 77 percent of nearby engineering leaders polled said they expect a positive impact on their businesses in the next 12 months.

Renewable power leaders also laud shale energy. The American Wind Energy Association says natural gas is a necessary partner for wind power to provide reliable electricity to the grid, and one solar company CEO said natural gas is “just what clean energy needs.”

New York State, where no hydraulic fracturing took place last year, had 44,000 of its jobs supported by supplier networks, trade flows, and income effects from earnings related to hydraulic fracturing in other states, according to Information Handling Services. These jobs are expected to grow to 74,000 by 2020.

If New York were to lift its moratorium and proceed with development of the Marcellus Shale, an additional 47,000 jobs would be created by 2020, according to Wood Mackenzie. That would bring to 121,000 the total number of jobs being supported by shale development in New York by 2020.

Placing moratoria and heavy-handed regulations on hydraulic fracturing has broad negative impacts on jobs and the overall economy, and therefore should be avoided by policymakers.

The following links provide more information about different industries that benefit from shale development.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help withstand ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography. 

US Shale Boom Benefiting Airports, Architects, Other Sectors of Economy
http://fuelfix.com/blog/2011/12/15/us-shale-gas-boom-benefit-airports-architects-other-sectors-of-economy/
William O’Keefe, CEO of the George C. Marshall Institute, compiles a list of new reports from around the country on natural gas development benefiting local, regional, and even national industries, including some one would expect to have no obvious connection to natural gas. 

Banking Industry in Region Realizes a Surge in Deposits Because of Shale
http://www.vindy.com/news/2012/jul/25/banking-industry-in-region-realizes-a-su/
First National Bank CEO Vincent J. Delie Jr. describes the ripple effect that “begins with the large gas companies and eventually impacts the entire supply chain, including fabricators, transportation companies, the hospitality industry and other industries that supply ancillary services” and benefits his own business through increases in commercial loans and deposits. 

MIT: Shale Gas Will Fuel a U.S. Manufacturing Boom
http://www.technologyreview.com/news/509291/shale-gas-will-fuel-a-us-manufacturing-boom/
The MIT Technology Review describes how manufacturers connected to natural gas are not the only ones benefiting from the boom due to increased demand for products to process and transport.

Other Industries Reap Benefits of Marcellus
http://www.bizjournals.com/pittsburgh/print-edition/2011/03/25/other-industries-reap-benefits-marcellus.html
The Pittsburgh Business Times reports how economic benefits of Marcellus shale development go beyond auxiliary companies; development also benefits law firms who are creating positions for their energy practices, and developers, who are building new offices for the now economically vital region.

Natural Gas Is Just What Clean Energy Needs
http://tech.fortune.cnn.com/2013/01/23/natural-gas-is-just-what-clean-energy-needs/
Arno Harris, CEO of Recurrent Energy, a leading solar project developer, says an excess supply of natural gas will be good for renewable energy, because the larger the supply the more likely it is to be exported, freeing up domestic market share for renewables.

Wind Power and Reliability: The Roles of Baseload and Variable Resources
http://www.awea.org/learnabout/publications/upload/Baseload_Factsheet.pdf
The American Wind Energy Association notes renewable energy needs to be combined with flexible natural gas plants to ensure the electric grid “operates reliably and cost-effectively.” 

Bakken Shale Creates Thousands of Jobs for Mining, Restaurant, Construction, and Retail Sectors
http://www.bloomberg.com/video/shale-revolution-unleashes-a-job-boom-DuOxzuIYSV2pCB48EJ~exw.html
Bloomberg reports Bakken shale mining has created 115,000 mining jobs, which led to 345,000 additional jobs in restaurants, construction, and retail, for a total of 500,000 jobs created in five years.

Engineers From All Over Private Sector Believe Development of Utica Shale Good for Business
http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/utica-shale-benefits-cleveland-area-businesses-engineers-say-1.380944#.UUHUA3KsNdM.twitter
Nearly 77 percent of engineering leaders said they expect Utica shale mining to have a positive impact on jobs and their businesses in the next 12 months 

Natural Gas Development Significantly Benefitting Restaurants
http://naturalresources.house.gov/uploadedfiles/puskarichtestimony03-14-13.pdf
Frank Puskarich, a BBQ restaurant owner from Pennsylvania, testifies to the U.S. House Natural Resources Committee in support of the natural gas industry, which he says has had a great positive effect on his business. 

Wood Mackenzie—Energy Consulting
http://www.api.org/newsroom/upload/api-us_supply_economic_forecast.pdf
Wood Mackenzie estimates an additional 47,000 jobs can be created by 2020 in New York State if shale development is allowed in the state (see page 42). 

America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy
http://heartland.org/policy-documents/americas-new-energy-future-unconventional-oil-and-gas-revolution-and-us-economy
The energy and engineering consulting firm IHS, Inc. highlights the state-level economic contributions of unconventional oil and gas development, noting hydraulic fracturing supported 44,000 jobs in New York State even though no mining is done there because it is illegal in the state.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Policy Analyst Taylor Smith at tsmith@heartland.org or 312/377-4000.