Research & Commentary: Shale Revolution Has Been a Giant Boon to Ohio’s Economy

Published October 10, 2016

The U.S. Chamber of Commerce’s (USCC) Institute for 21st Century Energy released a report in September 2016 titled What If … America’s Energy Renaissance Never Happened? The report paints a bleak picture, describing the fictional economic environment of a post-2009 Ohio that was never lucky enough to have benefited from the U.S. “energy renaissance” in oil and natural gas extraction, which is mainly the result of technological advancements in hydraulic fracturing and horizontal drilling.

According to the USCC report, Ohio would have lost $9.9 billion in state gross domestic product (GDP), $5.8 billion in labor income, and more than 114,000 jobs if this energy revolution never came to be. Of the total costs, $2 billion in lost GDP, $1.4 billion in labor income, and 21,500 jobs would come directly from the oil and gas industry’s extraction process; the remaining economic costs would be the result of substantially higher energy costs.

The study’s authors also say without the “energy renaissance,” a “significant portion” of Ohio’s “downstream” economy would be “at risk of being lost.” This includes $61 billion in state GDP, $32.6 billion in labor income, and over 545,000 jobs in annual employment. 

“One of these ‘at risk’ sectors worthy of special note is Ohio’s iron and steel manufacturing industries, which contribute $2.2 billion in direct state GDP to the state,” wrote the authors. “If energy prices had remained at their pre-renaissance highs, this sector would have been placed at immediate risk (i.e., the industry may stop or move production elsewhere). Because of the iron and steel industries’ ripple effect throughout the broader economy, the total economic value at risk increases to $5.9 billion.”

The study also notes Ohio collects a severance tax on shale production. The $21.3 million in revenues received by the state in 2015 is more than eight times the $2.5 million collected in 2010. These revenues are earmarked for the Ohio Department of Natural Resources, where they help fund “additional inspectors, emergency response staffers and other state priorities.”

The report highlights what Ohio and the country, in general, would look like had policies been enacted that would have prevented the energy revolution from occurring. “The policies which would have undermined our energy resurgence would have been misguided and counterproductive,” said Lt. Governor Mary Taylor in a press call regarding the report.

“The bottom line is this: The energy renaissance that has happened in the Marcellus and the Utica shale—that is what has brought Ohio back, in my opinion,” said Rep. Bill Johnson, who represents Ohio’s sixth congressional district and also took part in the phone conference. “Those counties that have significant plays in the Marcellus and the Utica shale have seen their unemployment rates drop by as much as 66 percent. It has been astounding the opportunities that have been created.”

Buttressing the USCC report on the impact of the shale revolution in Ohio is a study from Energy in Depth, which, using data from the Ohio Department of Taxation, found Ohio’s eight “shale counties” have seen a 65 percent increase in their sales tax revenues over the past five years, compared to just 37 percent in the non-shale counties. If Ohio’s other counties had grown at the same rate as its shale counties, the state would have seen an additional $6 billion in tax revenue over that period, with the counties themselves receiving an extra $1 billion themselves.

There is no scientific justification for banning hydraulic fracturing, commonly called “fracking,” or over-regulating it out of existence. The fracking process has transformed the energy outlook in the United States over the past decade, and the rise of shale gas as a replacement for coal has been primarily responsible for the United States now enjoying its lowest level of carbon-dioxide emissions since 1989.

Drilling is currently being conducted in the State of Ohio in a safe and responsible manner, and as the U.S. Chamber of Commerce’s study shows, it has significantly transformed the energy outlook of the Buckeye State for the better. As my colleague Isaac Orr has stated, “Hydraulic fracturing and the shale gas boom have provided the United States a cost-effective, clean, and abundant source of fuel that will stimulate economic growth while reducing greenhouse-gas emissions in a practical and significant way.”

The following documents provide more information about hydraulic fracturing.

What If … America’s Energy Renaissance Never Happened?
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have been created and $548 billion in annual GDP may have disappeared since 2009. Electricity prices would also be 31 percent higher and gasoline prices 43 percent higher.

Hydraulic Fracturing a Game-Changer for U.S. Energy and Economies
In this Policy Study from The Heartland Institute, Heartland Research Fellow Isaac Orr explains the advantages and disadvantages of smart drilling and its alternatives. Orr reviews the background and potential of hydraulic fracturing in the United States and puts that potential in the context of the supply of and demand for oil and gas. He addresses the environmental impacts of hydraulic fracturing, both positive and negative, as well as the public safety issues raised by activists, such as potential harm to drinking water supplies. Orr also discusses how oil and gas production is regulated at the state and national levels and suggests appropriate policies for the industry.

Research & Commentary: Study on Fracking-Related Air Pollution in Ohio Retracted Due to Errors–commentary-study-on-fracking-related-air-pollution-in-ohio-retracted-due-to-errors?source=policybot
Tim Benson, policy analyst at The Heartland Institute, writes about a  joint study from researchers at Oregon State University and the University of Cincinnati  – originally published in the peer-reviewed journal Environmental Science and Technology in March 2015 – claimed hydraulic fracturing, also called “fracking,” of the Utica shale in Carroll County, Ohio is causing significant air pollution. But the researchers have retracted the controversial study due to its numerous miscalculations and errors. When much of the erroneous data was corrected, the researchers found they “significantly” changed “air concentrations … relative to those reported in the published article.”

Research & Commentary: EPA and GWPC: Ohio Is Right, Anti-Frackers Wrong on Class II Injection Wells–commentary-epa-and-gwpc-ohio-is-right-anti-frackers-wrong-on-class-ii-injection-wells
Tim Benson, policy analyst at The Heartland Institute, writes about two recently released reports on Ohio’s Class II wastewater injection well program, including one from the Environmental Protection Agency. Benson says the studies have discredited claims made by opponents of hydraulic fracturing who say the creation of wells directly causes earthquakes and that the Ohio Department of Natural Resources has neglected to establish proper regulations needed to keep Ohioans safe.

Bill McKibben’s Terrifying Disregard for Fracking Facts
This Heartland Institute Policy Study, written by Research Fellow Isaac Orr, examines how methane emissions are measured, reports the effect those emissions may have on global warming, and discusses several falsehoods journalist Bill McKibben repeats from the discredited movie Gasland. It also evaluates the available fracking alternatives and discusses the relatively small impact new methane-emissions rules enacted by the Environmental Protection Agency will likely have on Earth’s climate.

Fracking Facts: The Science, Economics, and Legal Realities
Hydraulic fracturing, commonly known as fracking, has been employed in the United States since the 1940s. Although innovation has improved the precision of the process, the essentials are the same. Utilizing horizontal drilling, a mixture of mostly water, sand, and trace amounts of chemicals, are used to create fissures in underground shale deposits to allow oil and natural gas trapped in hard rock to move toward the surface to be collected. Activists have blamed fracking and the processes associated with it for emissions of pollutants, earthquakes, and even groundwater contamination, though independent evidence consistently shows these allegations to be false. Leigh Thompson of the Texas Public Policy Foundation argues the evidence supporting fracking bans looks slim when attention is drawn to the facts.

Managing the Risk of Hydraulic Fracturing: An Update–of-hydraulic-fracturing-an-update?source=policybot
Kenneth P. Green of the Fraser Institute argues policymakers should ignore the siren song made by those calling for moratoria or bans on fracking.

Hydraulic Fracturing: Critical for Energy Production, Jobs, and Economic Growth
Increased energy production on private lands in the United States has been one of the most promising economic success stories in recent years. A large part of the success is due to an energy-extraction process known as hydraulic fracturing. Misconceptions about hydraulic fracturing, also called fracking, abound. The Heritage Foundation’s Nicolas Loris explains hydraulic fracturing is safe when regulated effectively and says fracking greatly increases the nation’s energy production, thus promoting job creation.

Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources
This assessment from the Environmental Protection Agency provides a review and synthesis of available scientific literature and data to assess the potential impact hydraulic fracturing may have on the quality or quantity of drinking water resources, and it identifies factors affecting the frequency or severity of any potential impacts. The scope of this assessment is defined by the hydraulic fracturing water cycle, which includes five main activities: water acquisition, chemical mixing, well injection, flowback and produced water, and wastewater treatment and waste disposal.


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 website of Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

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