Hydraulic fracturing, or fracking, provides the average local household with enormous economic benefits, according to a new study published Thursday by economists at the University of Chicago.
Driven by rises in wages and royalty payments, researchers found that fracking added a total of $1,200 to $1,900 per year for the average nearby household, causing a 6 percent increase in average income. The researchers also found that communities with fracking had a 10 percent increase in employment and a 6 percent increase in housing prices.
“This study makes it clear that on net there are benefits to local economies — which we believe is useful information for leaders in the United States and abroad who are deciding whether to allow fracking in their communities,” Chris Knittel, an economist who co-authored the study, said in a press statement.
Other research shown that fracking for oil and natural gas is most popular when locals see the economic benefits.
“This is the latest in a long string of studies to underscore how shale development is raising the quality of life for Americans by thousands of dollars a year,” Dr. Katie Brown, a researcher for the pro-industry group Energy In Depth, told The Daily Caller News Foundation. “Thanks to oil and gas development, families will have more money in their pockets this holiday season.”
From 2012 to 2014, the shale oil industry generated 4.6 million new jobs and $3.5 trillion in new wealth due to an energy boom and the resulting low gas prices, according to a study published by the National Bureau of Economic Research (NBER).
“The emergence of hydraulic fracturing combined with horizontal drilling has undoubtedly provided an economic boost to local communities,” Chris Warren, a spokesperson for the free market Institute for Energy Research (IER), told The Daily Caller. “Not only has it created jobs and brought new businesses to these areas, but it’s also generated local and state revenue for public schools.”
Fracking can offer enormous economic benefits to local economies. The government of Weld County, Colorado, which adopted fracking earlier on, gets $122.4 million in extra tax revenue from the process, according to a study by Duke University.
“However, I think this study could be underselling the benefits of hydraulic fracturing by limiting the scope to local communities,” Warren continued. “The hydraulic fracturing revolution has led to huge benefits around this country and the rest of the world. The increase in U.S. oil and gas production has broken [the Organization of Petroleum Exporting Countries] OPEC’s stranglehold on oil prices and has led to lower energy costs.”
Falling energy prices caused by fracking have saved the average American household $747.30 each year since 2008, according to a report published in December by the Energy Information Administration.
When the price of energy decreases, the cost of goods and services produced decline as well. Any product transported to market via truck or car uses gasoline and virtually every service uses electricity. Thus, low energy prices effectively reduce the price of almost everything. This is especially great news for the poor, who tend to spend a higher proportion of their incomes on energy.
If environmentalists had successfully banned fracking in 2017, an estimated 3.9 million jobs would instantly disappear due to indirect economic 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 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.
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