Dartmouth Study: Shale Creates Significant Economic Benefits

A new National Bureau of Economic Research study led by Dartmouth College experts examines the economic and job-creating impact of shale development, enabled by fracking, within 100 miles of active drilling locations.

Commenting on the study’s findings, Dartmouth economics professor Bruce Sacerdote notes that “It’s surprising just how much of the revenue, how large the benefits are in the county and within 100 miles of the county.”

Key study takeaways:

  • Over a third of fracking revenue stays within the regional economy.
  • Researchers analyzed data from oil and natural gas production from 2005 to 2012 and found that within 100 miles of new production, $1 million of extracted oil and gas generates $243,000 in wages, $117,000 in royalties and 2.49 jobs.
  • The impact on jobs and income at the state level was approximately five times larger than the county impact.
  • Within the county, every $1 million generates $66,000 in wage income, $61,000 in royalty payments and 0.78 jobs within the county.
  • With the creation of 725,000 jobs associated with the new oil and gas extraction between 2005 and 2012, the study findings indicate that U.S. unemployment was lowered by 0.5 percent during the Great Recession.

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What’s more, shale development has helped drive U.S. CO2 emissions down to their lowest point in more than 20 years.

Here’s what they’re saying about shale’s “widespread” benefits:

  • Shale Production Brings “Widespread Economic Benefits”: The economic impacts from fracking extend far beyond the county where drilling activity is happening, according to a report. Dartmouth College researchers…found that the impact on wages and employment was many times larger at the regional and state levels than in the county where drilling occurred. The findings underscore the widespread economic benefits to areas that rode the boost from fracking activity to a faster post-recession recovery. … They found that $1 million of new production generated $66,000 in additional wages for oil and gas workers and service companies, $61,000 in royalty payments and 0.78 new jobs in the county where the drilling was taking place. There was even greater economic spillover to surrounding communities. Within a 100-mile radius, $1 million of production was associated with wage increases of $243,000, $117,000 in royalties and 2.49 jobs, an impact about three times as large as at the county level. The industry buffered energy-producing states from greater economic shocks during the Great Recession. … … “Every corner of the commonwealth is benefiting from the growth and success of this industry, as host counties and communities nearly 100 miles from well sites are seeing meaningful benefits,” said MSC’s Erica Clayton Wright. (Tribune-Review, 11/7/15)
  • Fracking “Blunted the Impact of the Financial Crisis”: A U.S. oil and gas drilling boom fueled by hydraulic fracturing technology added about 725,000 jobs nationwide between 2005 and 2012, blunting the impact of the financial crisis, according to a study released on Friday. … Researchers conducting the National Bureau of Economic Research study analyzed data from over 3,000 U.S. counties and determined that within 100 miles of new production, $1 million of extracted oil and gas generated $243,000 in wages, $117,000 in royalties and 2.49 jobs. “Aggregating to the national level we conclude that aggregate employment rose by 725,000 jobs due to fracking, causing a reduction in the U.S. unemployment rate of 0.5 percent during the Great Recession.” (Reuters, 11/6/15)

View additional fact-based studies, reports and presentations in the MSC’s Library.