Natural Gas Development Strengthens Pa. Communities

Natural gas development boosts local economies and benefits communities across the Commonwealth, a new study from the Energy Policy Institute at the University of Chicago confirms. Communities that welcome shale development, the study’s authors conclude, have stronger economies, more jobs, higher home values and experience an increase in government revenues, with areas across Pennsylvania’s Marcellus Shale witnessing some of the “largest benefits.”

According to the authors, the study “makes clear that on net there are benefits to local economies – which we believe is useful information for leaders in the U.S. and abroad who are deciding whether to allow fracing in their communities.

Key Takeaways:

  • Shale development generates significant revenue in communities: “Counties with a high level of hydraulic fracturing activity produce an additional $400 million worth of oil and natural gas each year. To put this into context, the most productive counties saw a per capita increase in production of about $19,000.”
  • Shale development improves the local economy: “Counties with a high level of hydraulic fracturing experience marked increases in economic activity. Specifically, the study found up to a 7 percent increase in average income.”
  • Housing prices increased: “The study found that housing prices increased on average by about 6 percent after shale development began.”
  • Each shale region fares differently, with the Bakken and Marcellus regions seeing the greatest benefits: “North Dakota’s Bakken shale and Pennsylvania’s Marcellus shale saw the largest benefits, with house price increases of 23 percent and 9 percent, respectively.”

This latest independent economic report comes on the heels of two recent studies from the National Bureau of Economic Research and the London School of Economics that conclude shale development is a key U.S. job-creator and has boosted America’s manufacturing competitiveness.

Here’s what they’re saying.

  • “Overall, Fracking Benefits Nearby Communities, Study Finds”: The energy boom unleashed by hydraulic fracturing provided significant economic benefits to nearby communities, boosting employment, incomes and home values, according to a study by the University of Chicago. … The study, aimed to quantify the costs and benefits of the so-called shale revolution, studying communities near shale formations such as the Eagle Ford in Texas, Bakken in North Dakota and Marcellus in Pennsylvania between 2000 and 2013. So far, the study concluded, the economic benefits of the oil and gas production outweigh costs. … The study found that the shale boom produced benefits valued at as much as $1,900 a year for the average household in nearby communities. (Houston Chronicle, 12/22/16) 
  • “Report Finds Shale Development Improves Local Economies”: Through development of a “willingness-to-pay” (WTP) metric, University of Chicago researchers found that shale development adds an average welfare gain of $1,300-1,900 per household per year, totaling approximately $64 billion for all of the aforementioned shale areas studied combined. The increase takes into account increased income and local activity. … “The average community that has allowed fracking has enjoyed substantial net benefits.” The report found that counties with a high level of fracking activity saw a 4.4-6.9% increase in total income, driven primarily by increases in wages and other factors such as royalty payments to local land owners. Employment also increased 3.6-5.4% and salaries went up 7.6-13%. Additionally, local governments saw an average increase in revenues (15.5%) that more than offset an average increase in expenditures (12.9%). EPIC also found that housing prices increased 5.7% and housing rental rates went up 2.7% in local communities after shale development began. … Janet Currie, economics professor at Princeton University and another co-author, added that local communities that banned fracking may, on average, see fewer economic benefits. (Natural Gas Intelligence, 12/23/16)

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