Economics, Energy and the Environment, Pethokoukis

More evidence the shale revolution probably got Obama reelected

Image Credit: Shutterstock

Image Credit: Shutterstock

President Obama really should visit North Dakota and see for himself America’s energy revolution. A new report from IHS Global Insight highlights just how much impact unconventional oil and gas activity may be having on the US economy. For starters, it increased US disposable income by an average of $1,200 per US household in 2012 thanks to smaller energy bills as well as lower embedded energy costs in all other goods and services. IHS thinks that figure will to grow to just over $2,000 in 2015 and reach more than $3,500 in 2025.

Then there are the jobs:

The new study widens the breadth of the research to include the full energy value chain (upstream, midstream and downstream energy and energy-related chemicals) and the overall macroeconomic contributions on the manufacturing sector and broader U.S. economy. Midstream and downstream unconventional energy and energy-related chemicals activity currently support nearly 377,000 jobs throughout the economy, the study finds. Combined with upstream activity, the entire unconventional oil and gas value chain currently supports more than 2.1 million jobs. Total jobs supported by this value chain will rise to more than 3.3 million in 2020 and reach nearly 3.9 million by 2025.

Without the shale revolution, election year 2012 might have seen the official unemployment over 9% in November instead of 7.8%. And the average American would have faced a higher cost of living and lower income. More importantly now, the US energy industry continues to be a real economic bright spot.

8 thoughts on “More evidence the shale revolution probably got Obama reelected

  1. ….unintended positive consequences……natural market forces will always carry the day……..but put this proposition in front of Obama and he will cite government programs as the key driver…………America will succeed in spite of the morons in Washington….

  2. Combined with upstream activity, the entire unconventional oil and gas value chain currently supports more than 2.1 million jobs.

    North Dakota (ND) accounts for ~25% of the shale oil/gas production. ND has increased employment by 97,000.

    97,000 x 4 ND’s equals 400,000. Where are the other 1.7 million jobs?

    • Just following up on the bull with some BLS data charted from FRED. Back of the envelope, oil and gas extraction jobs bottomed in 2003 at ~120,000 jobs. 2013 will average ~195,000 jobs, an increase of ~75,000 jobs.

      Some think that a 75,000 increase in extraction jobs creates an additional 2.025 million jobs. That a 28 times multiplier. That’s bull.

      • Where does the study claim a 28X multiplier for each new extraction job in and of itself? I only looked at the summary at the landing page, and didn’t download any of the report sections, but all I see is the claim that “unconventional oil and gas activity” [e.g. fracking and such] has lots of beneficial downstream effects in the economy. That may or may not be true, but any beneficial effect such as a lower ceiling on energy costs, more transport demand for LNG and so on; these would presumably support higher employment, ceteris paribus. Again, that may or may not be the case, but it certainly isn’t prima facie BS claim.

        • Where does the study claim a 28X multiplier for each new extraction job in and of itself?

          It doesn’t. But it is arithmetic. IHS Global are paid consultants to the energy biz and claim by bottom up inference that there is a 28x multiplier. I just call bull. I’ll accept a 6x multiplier (+2/- 2) multiplier range.

          Fracking has not yet created any notable downstream chemical manufacturing “renaissance” employment. Sure there is an increase in midstream truck, rail, barge, pipeline employment. And in the same breath there is a decrease in truck, rail, barge, pipeline import employment.

          • Upon what actual variable does IHS claim a 28X multiplier, or are you just eager to hold on to your talking point?

      • The Fred data set is under representing in a big way. The oil and gas employment base extends beyond oil and gas extraction. There are hundreds of thousands of jobs in manufacturing, government, civil and mechanical engineering, transportation, infrastructure, midstream collection and processing, and downstream refining that are primarily related to oil and gas development.

        For instance Colorado alone, which isn’t even in the top 5 among producing atates has more than 50,000 primary oil and gas jobs.

        http://www.coga.org/index.php/Newsroom/PressReleasesArticle/university_of_colorado_economic_study_2012#sthash.3bkEymNb.dpbs

  3. Oil & Gas has produced a lot more sustainable real jobs than the BO’s Alternative Flop Energy programs that created 0 jobs and burdened the taxpayers for $30 BILLION Dollars just to repay BO’s contributors. We need to remember the lefty crooks and put them in PRISON when the revolution wins!

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