Halloween may be a few weeks away, but a new report from the U.S. Chamber of Commerce poses a scary question for the United States economy: “What would the economy look like if the hydraulic fracturing boom, which has revolutionized oil and natural gas production in the U.S., had never happened?”
The report found fracking has been a major job-creator and saved families hundreds of dollars at the gas pump. Considering the Obama economy has been bogged down with stagnant wages, “real” unemployment rates of nearly 10 percent, and anemic growth, thinking about what the nation’s economic outlook would look like without hydraulic fracturing—or if fracking had been severely restricted by President Barack Obama’s proposed regulations—is downright horrifying.
Hydraulic fracturing, coupled with horizontal drilling technology, has turned the energy world upside down. As recently as 10 years ago, many experts believed the United States was running out of oil and natural gas and that imports would only continue to rise. Ten years later, the United States is the largest producer of natural gas in the world, and oil production has grown from about five million barrels per day (bpd) in 2008 to about 9.4 million bpd in 2015, an increase of 85 percent. As a result, the United States imports only 24 percent of the oil it consumes, compared to 60 percent in 2006.
One of the key ways Americans measure the health of the economy is by how many jobs are available. The dramatic increase in oil and gas production spurred the creation of 4.3 million direct, indirect, and induced jobs in the United States between 2009 and 2015.
These numbers would be impressive by themselves, but when one considers only 9.3 million jobs have been created in the entire economy since Obama took office in January 2009 the numbers are astounding, indicating nearly 46 percent of all the jobs created during his administration have resulted from the booming hydraulic fracturing industry. In fact, without the jobs created or supported by hydraulic fracturing, Obama would have the worst record on job creation of any two-term president in recent history.
The number of jobs available is important, and so are the wages they pay. Considering the typical take-home pay for middle-income families is about the same today as it was 20 years ago (once adjusted for inflation), the fact wages in the oil and gas sector pay much more than the national average has sent ripple effects throughout the entire economy.
According to the Bureau of Labor Statistics (BLS), jobs in the oil and natural gas extraction industry paid an average of approximately $44 per hour in August of 2016, compared to a national average of approximately $25/hour, which means oil and gas jobs pay 76 percent more than the national average.
The Chamber report also found fracking is responsible for adding approximately $548 billion to the U.S. gross domestic product (GDP). GDP can be a difficult metric to conceptualize because the numbers are so large, but this growth is comparable to adding the entire economy of Sweden (and then some) to U.S. economic output. Conversely, if the hydraulic fracturing revolution had never happened, it would be like wiping the entire economic output of North Carolina off the map.
With these figures firmly established, it’s undeniable fracking is providing an extremely bright spot in a very dim economy.
Despite the rhetoric of some environmental groups that may or may not be funded by the Russian government, this tremendous economic growth has not come at the expense of the environment. In the most extensive study on the impact of fracking on water quality, the U.S. Environmental Protection Agency (EPA) found “No evidence of widespread, systemic impacts on groundwater quality.” Isolated situations have occurred in which leaky well casings and surface spills have affected water supplies, but EPA says these cases are rare compared to the number of wells drilled.
Obama has boasted about what he says has been the strong pace of job creation during his administration, but the 4.3 million jobs supported by fracking have been generated in spite of the president, not because of him. In fact, the Obama administration worked tirelessly to stem the growth of hydraulic fracturing by imposing redundant regulations on fracking on federal lands; enacting unnecessary new rules on methane emissions, which will hurt small oil and gas producers; opposing pipelines, and proposing a $10/barrel tax on oil.
Hillary Clinton has promised to continue many of these policies and to possibly enact new restrictions as well, a fact that’s truly spookier than anything you’ll see this Halloween.