WASHINGTON – The natural gas “shale gale” that has dramatically transformed the outlook for U.S. energy supplies is also having profound economic impacts — creating jobs, reducing consumer costs of natural gas and electricity, stimulating economic growth and bolstering federal, state and local tax revenue, according to a new study from Englewood, Colorado- based energy research firm IHS Global Insight.
The study found that shale gas production supported more than 600,000 jobs in 2010, a number that is projected to grow to nearly 870,000 by 2015. The natural gas “shale gale” that has dramatically transformed the outlook for U.S. energy supplies is also having profound economic impacts — creating jobs, reducing consumer costs of natural gas and electricity, stimulating economic growth and bolstering federal, state and local tax revenue, according to the IHS report.
The study, The Economic and Employment Contributions of Shale Gas in the United States, is the most definitive study to date tracking the long-term economic impact of U.S. shale gas production. It presents the economic contributions of shale gas in terms of jobs, economic value and government revenues through 2035, as well as the broader macroeconomic impacts on households and businesses. The report is the first of three on the economic effects of unconventional gas and oil development in North America.
“Shale is really proving to be a very big job creator,” said John Larson, a vice president IHS. “It really stands in sharp contrast to many sectors of the economy. During a significant economic downturn – the most significant since World War II – that’s pretty remarkable.”
AN ECONOMIC DRIVER
The IHS analysis, commissioned by the trade group America’s Natural Gas Alliance, provides a detailed look at the national impact of the shale gas revolution. Among the findings:
The study found that shale gas production supported more than 600,000 jobs in 2010, a number that is projected to grow to nearly 870,000 by 2015.
Shale gas production contributed $76 billion to the U.S. gross domestic product in 2010, but IHS predicts that will jump to $118 billion by 2015 and $231 billion in 2035.
Tax revenue from shale gas production, which accounted for $18.6 billion to federal, state and local governments last year, is projected to hit $57 billion annually by 2035 – or $933 billion total over the next 25 years.
Benefits also include cheaper power bills for consumers. Savings from lower gas prices are projected to add an annual average of $926 per year in disposable income to U.S. households between 2012 and 2015.
The ANGA has widely touted a 100-year supply of the fuel in U.S. borders, which some lawmakers have criticized as being overly optimistic. They cite the multipliers used to predict the add-on jobs tied to workers directly employed by the industry.
But Larson described the accounting techniques used in the IHS study as ‘conservative.’ For one thing, the assumptions underpinning it don’t take into account potential shale discoveries that haven’t been made. In addition, IHS also assumed that there would be no new production after 2010 in New York state, where policymakers are considering a broad natural gas drilling ban.
ENVIRONMENTAL CONCERNS COULD IMPEDE BOOM
Conservationists and some local communities are warning about potential groundwater contamination and the high water demands of hyraulic fracturing used to free shale gas from deep underground. Disposal and treatment of wastewater generated by the fracking process is one issue. CO2 emissions from increased drilling operations is also a major concern, according to some environmental groups.
Fears about those problems may result in a drilling ban in New York state and have spread to regions that have long histories with the industry.