The Fracking Job Creation Myth

Tue, 2012-01-10 15:41Farron Cousins
Farron Cousins's picture

The Fracking Job Creation Myth

The prospect of job growth in the United States has been a major selling point for industry in the four years since the beginning of the recession. And even with positive gains being made in the job sector over the last year and a half, unemployment is still hovering around 8.5%. That is why unemployed Americans are still eager to jump onto plans that promise to create much-needed jobs in our country.

The dirty energy industry is well aware of the fact that promising jobs in these times can get you ahead, and they are using this to their advantage. In an attempt to push for increased hydraulic fracturing (fracking), the industry is touting the alleged job creation benefits of the practice. They are pitching fracking as a snake oil salesman would pitch a “cure-all tonic,” claiming that allowing them to continue fracking and drilling activities will help our economy by creating jobs and it will help our country by solving our energy problems.

But fracking has been going on for decades, the industry likes to remind us, although it has picked up tremendous steam in the last 5 years with the advent of directional drilling. So where are all those hundreds of thounsands of jobs that we’ve been promised? The answer to that question is simple: They don’t exist - At least not in the numbers the industry wants us to believe.

Helene Jorgensen from the Center for Economic and Policy Research outlines how the dirty energy industry has tried to hoodwink the American public:

In an intensive lobbying campaign to influence a skeptical public’s opinions about fracking, the gas industry has commissioned a number of economic studies that find huge job gains from fracking. A recent study by the economic forecasting company IHS Global Insight Inc., paid for by the America’s Natural Gas Alliance, projects that fracking will create 1.1 million jobs in the United States by year 2020.

However, a closer read of the study reveals that the analysis also projects that fracking will actually lead to widespread job losses in other sectors of the economy, and would result in slightly lower overall employment levels the following 10 years, compared to what it would be if fracking were restricted. In another study, commissioned by the Marcellus Shale Coalition, researchers with Penn State University estimated that gas drilling would support 216,000 jobs in Pennsylvania alone by 2015. The most recent data from the Bureau of Labor Statistics show employment in the oil and gas industry to be 4,144 in Pennsylvania.

Jorgensen points out that Pennsylvania is one of the most actively fracked states in the country, and they provide an excellent example of the real job creation associated with fracking:

What the data tell us is that fracking has created very few jobs. In fact, employment in five northeast Pennsylvania counties (McKean, Potter, Tioga, Bradford and Susquehanna) with high drilling activity declined by 2.7 percent. Of course, the economy was in a recession, and it is possible that employment would have decreased by more had it not been for fracking. To evaluate this, one can look at the employment trend in five adjacent New York counties (Allegany, Steuben, Chemung, Tioga and Broome) which had a moratorium on fracking. By assuming that the change in employment in the five PA counties would have been the same as in the five NY counties, a baseline for employment can be established if no hydraulic fracturing had occurred. In the five NY counties, employment declined by 5.2 percent over the three year period.

Had employment declined by the same rate in the PA counties as in the NY counties since 2007, employment would have been 51,950 instead of 53,300 in 2010. This suggests that hydraulic fracturing contributed to the creation of around 1,350 jobs – this includes both direct jobs in the gas industry, indirect jobs in the supply chain and induced jobs from spending by workers and landowners. (An industry-funded study by the Public Policy Institute of New York projects that the same drilling level would create 62,620 jobs in New York).

Obviously, the practice does require a human workforce, but not nearly as many people as the industry would have us believe. For example, an industry-funded study tells us that opening up new areas of Ohio for fracking would create as many as 200,000 new jobs, similar to the projections that never materialized in Pennsylvania.

According to Jorgensen’s piece, which echoes what Food & Water Watch found in their report, the few jobs that are created are actually outsourced to already-employed oil industry workers from states like Texas and Oklahoma, instead of providing new jobs for local citizens. Nearly 80% of fracking jobs are outsourced in this manner.

But this new information is hardly shocking to those familiar with the dirty energy industry’s propaganda tactics regarding job creation and job loss in America. In addition to the myth being pushed about fracking creating jobs, the dirty energy industry and corporate-friendly politicians have been pushing the erroneous talking point that regulations (or other forms of “government interference) are killing jobs in America. That particular talking point has been debunked by more than a half dozen reports in recent months. Our own reporting on the subject is here. If that isn’t enough, you can check here, here, here, here, here, and here.

Previous Comments

Arkansas is a very small play in relation to other states. But here are the figures

·        $17.9 billion overall economic impact;

·        More than 11,000 new jobs;

·        $1.8 billion in state taxes; and

·        More than $150 million in local sales and property taxes.

Also note that the 11,000 new jobs are directly employed by the oil and gas industry. The oil and gas industry has a very high rate of induced and indirect employment, probably a factor of 3 or more. Can anyone contribute an actual figure? This is because of this industry buys parts locally, uses local contractors, local welders, local machine shops. Then add in the restaurants, oilfield workers don’t take peanut butter and jelly for lunch. My company spends more than $15,000.00 a month just on motel bills in Arkansas. One of the biggest problems in Arkansas is our state legislators had to call a special session to figure out what to do with our surplus last year. Check it out we have NO BUDGET DEFICIT

I suggest you get you data from more reliable sources

The Marcellus Shale industry is generating measurable economic benefits for areas of the state in which drilling is occurring. From March 2010 to March 2011, Washington County — home to the first Marcellus well — had the third-highest percent increase in employment in the nation, according to the U.S. Labor Department’s Bureau of Labor Statistics. Williamsport, according to the U.S. Commerce Department, was the seventh-fastest growing metropolitan area in the country in 2010.

In other areas of the commonwealth, economies are benefiting through ancillary business opportunities. In a recent series of Marcellus Shale forums hosted by the PA Chamber Education Foundation and chambers of commerce, attendees heard from companies, many that do not have their primary location in drilling regions, that are expanding their operations and hiring because of their support work for the industry.

http://www.pennlive.com/editorials/index.ssf/2012/01/pennsylvania_needs_uniform_mar.html

Indirect employment is extremely high…

…but indirect employment will happen no matter what the industry is, so its kind of a moot point.

Furthermore, it rarely benefits anywhere else but where the head offices are.

Shipping in a bunch of workers and extracting them later doesn’t do much for a local economy.  This was such an obvious issue, that Canadians will recall that this was a sticking point with Newfoundland and the Hibernia project.  Danny Williams demanded real jobs, and if not, he sent the oil companies packing.  (Yes Troy… he really did that.)

In Alberta… small towns occasionally get a hotel thrown up in them, which then get frequented by the hookers.  I also doubt the revenues the farmers get from the oil plays are generating much revenue, since they are still subsidized by the government.

Well indirect employment will not happen if the people do not have the money to spend. Indirect employment comes from nearly every economic sector. If people did not have money they would not be able to build houses. But they do have money and they are building houses. Therefore indirectly as it is then carpenters, plumbers, electricians, loggers, mill workers and many more are working because of the money flowing. That is indirect employment. As for the out-of-state employment, yes in the beginning this was the case. That is because they have to import them until they can hire local labor and get them trained. Right now you can drive through the employer parking lots in Arkansas and out of thousands upon thousands of cars you find maybe 1 in 50 with out of state tags. People are crying about the economy and about how bad it is but this drive thought the counties effected by the shale play and you see a totally different scenario. Yes it is small, only about 11 counties but these counties are having an economic boom and providing tax dollars to the rest of the state. Arkansas has NO state deficit! The report is prepared each year by the University of Arkansas. Maybe some people should make up some big signs disputing their accuracy and parade around the stadium at the next Hog game.

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Last week brought yet more evidence that investors in oil and gas companies are waking up to the risks of fracking and climate change.

Two natural gas companies, Anadarko Petroleum and EOG Resources, recently struck a deal with New York Attorney General Eric Schneiderman to disclose the financial and environmental risks associated with fracking to their shareholders, including “probable future regulation and legislation...

read more