Hydraulic fracturing generated $3.5 trillion in new wealth between 2012 and 2014 in spite of falling oil prices, according to a new study, but today’s rising prices could be even better for the U.S. economy.
From 2012 to 2014, the shale oil industry generated 4.6 million new jobs due to an energy boom and the resulting low gas prices, according to a study published by the National Bureau of Economic Research (NBER). Expensive energy could be a huge net positive for the U.S. fracking economy because rising oil prices mean more drilling.
Oil prices fell to a record low of $30 a barrel during the previous year, sharply reducing the industry’s profit margins, which are now rising again. Researchers estimate that new economic activity from fracking technology created around 4.6 million net new jobs, but only about 1.6 million of these new jobs were directly linked to the oil industry, while many of the rest were due to lower gas prices and the positive effect that had on the American economy.
“What’s often overlooked is the impact that the shale revolution has had throughout the economy,” Chris Warren, a spokesperson for the pro-industry Institute for Energy Research (IER), told The Daily Caller News Foundation. “Lower energy prices mean people have more money to save or spend on other day-to-day necessities. More energy production leads to job creation in other sectors of the economy, whether it’s manufacturing, healthcare, education, etc.”
As prices rise again, money will have to be spent on expensive gasoline and energy, which instead could have been used stimulating the local economy, financing investment or saved.
The NBER study concluded the vast majority of new oil development occurred on privately held land, because getting permission to drill on federal land was exceedingly difficult during the study period.
“The NBER study is consistent with a study we released last year that looks at the future economic impacts of opening federal lands to energy development,” Warren told TheDCNF. “That study found that opening up federal areas to natural gas, oil, and coal production could create 2.7 million jobs over the next 30 years and lead to $20.7 trillion in economic activity over the next 37 years.”
Opening federal lands for natural gas creates a huge number of high-wage jobs inside and outside the energy industry, according to a the study published last December by Louisiana State University and IER. Fracking has already created an estimated 1.7 million jobs and will likely create a total of 3.5 million by 2035.
“The shale revolution is a product of American ingenuity and private property rights,” Warren noted. “It’s important to note that the boom in oil and gas production happened on state and private lands, while production on federal lands has lagged far behind.”
If environmentalists had successfully banned fracking in 2017, an estimated 3.9 million jobs would instantly dissappear due to indirect environmental effects, rising to 14.8 million jobs lost by 2022, according a report by the U.S. Chamber of Commerce. Gasoline prices would almost double, as would electricity prices. U.S. household incomes would fall by $873 billion.
Opening up the Arctic National Wildlife Refuge’s (ANWR) oil reserves would create an estimated 736,000 new American jobs, according to an economic analysis.
Studies by industry groups estimate that offshore drilling would create 840,000 American jobs and nearly $200 billion in revenue for the government by 2035.
Opening up these lands and waters would also lead to $5.1 trillion in new wages and $3.9 trillion in new federal tax revenue over the next 37 years, which would massively stimulate the economy, according to other research.
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