Evidence continues to mount showing that the rise in oil and natural gas production from unconventional sources in the United States is yielding tremendous economic benefits for Americans.
A recent demonstration comes courtesy of the team running the Brookings Institution’s Metropolitan Policy Program. Several weeks ago they launched an interactive version of their quarterly MetroMonitor feature, which examines the latest economic data to gauge the health of the 100 largest metropolitan areas in the United States.
The researchers at Brookings look at several economic indicators – including unemployment, output, and housing prices – to come up with a ranking of metropolitan areas on their overall progress in recovering from the economic downturn of the last few years.
Consider a few of the economic success stories that help make up the Brookings Top 10: New Orleans (#1), Houston (#2), Austin (#8) and Youngstown, OH (# 10). Not far behind is the Dallas-Fort Worth metropolitan area, which ranked #14.
Readers will recognize that each of these five metropolitan areas is associated in some way with domestic energy development.
New Orleans is a hub for offshore oil and gas drilling in the Gulf of Mexico. Houston is the nation’s unofficial oil and gas capital. And south central Texas, Fort Worth and eastern Ohio are some of the newer areas in unconventional oil and gas resources like shale.
These rankings won’t surprise regular readers of this blog accustomed to posts highlighting various facts about the economic contributions of the oil and gas industry.
The connection between energy development and a city’s economic strength didn’t escape the attention of Brookings’ analysts, either. Their commentary on the most recent quarter’s rankings notes that “the extent of the economic recovery remained strongest in Texas metro areas, where the recession was relatively mild and natural gas has boomed.”
Energy development is no magic bullet if a region’s economy is beset by other significant challenges. Pittsburgh, for instance, ranked just 54th overall despite being situated in the heart of the Marcellus shale. While it ranked 22nd in employment growth – thanks in part to Marcellus drilling – the city still faces economic obstacles related to the contraction of its historic manufacturing base.
Of course, oil and natural gas development aren’t the only factors that can contribute to a region’s success. The Brookings report notes strong performances from high-tech metropolitan areas like Boston, San Jose and Seattle, as well as “portions of the Mountain West where house prices have started to stabilize.” And a state’s tax and regulatory policies can go a long way to determining the economic climate.
Yet one can’t deny the obvious connection between a metropolitan area’s economic strength and its proximity to oil and gas development in many cases. Don’t just take my word for it – that was the conclusion of the nationally syndicated radio program MarketPlace as well.
Similarly, the United States Conference of Mayors unveiled a study recently predicting steady growth this year in the nation’s metro economies, much of it driven by domestic energy development. Of note, the Mayors anticipate growth rates of more than 7 percent for several cities with strong ties to energy, like Lafayette, LA; Odessa, TX, and Bismarck, ND. The headline on a Reuters story about the Mayors’ report sums up their findings perfectly: “Energy, manufacturing fuel U.S. cities’ growth.”
What both studies make clear is that a lot of factors drive economic recovery – and one of those is oil and gas development. The mayors and other municipal leaders of our nation’s energy centers appreciate this. Our national leaders should note this as well.