Newsworthy events that occur during the holiday season often don’t get the attention they deserve. Such was the case with the latest study from the energy consulting group IHS Global Insight on oil and natural gas development from unconventional sources like shale, which came out at the end of 2012.
I took note of the IHS report in an earlier post, but it merits repeating because it offers a valuable way to view the enormous, far-reaching contributions to the American economy made possible by the innovative application of hydraulic fracturing and horizontal drilling.
Perhaps the report’s most significant finding is that the benefits of unconventional oil and gas development are being felt even in those states without oil and/or gas production. There are 32 states in the lower 48 without unconventional energy production, yet according to IHS “a significant portion of the economic activity is located in [these] ‘non-producing states.”
And those economic gains are considerable. IHS estimates that, nationwide, unconventional oil and gas production contributes over 1.7 million jobs and $63 billion in government revenues today. Those figures could grow to 3 million jobs and $113 billion in annual government revenues by the end of the decade.
It’s obvious that states like Texas, North Dakota and Pennsylvania are prospering from the increased energy production within their borders. But so are states without significant production. Why? Because they often provide goods and services that are vital to oil and gas exploration and production.
So even New York is enjoying significant economic benefit from unconventional development in other states (notably its next-door neighbor, Pennsylvania). It has more than 44,000 industry-supported jobs, the most of any non-producing state.
It’s important to point out, though, that New York’s economic gains are not nearly as large as they might be if the Empire State lifted its effective moratorium on hydraulic fracturing in the Marcellus Shale.
The IHS study makes abundantly clear that the economies of states such as Illinois, Florida and Michigan – not known to be centers for oil and gas development – are also being buoyed by the rise in production from other areas.
That helps to give a national context to what’s going on with the considerable increase in oil and gas production from various shale plays around the country – developments that some critics claim are isolated, regional economic bonanzas.