Earlier this month, two Ohio economists published a paper downplaying the economic impacts of natural gas drilling in Ohio. They argued that optimistic employment projections should be shifted downwards and that the overall employment effects will not be as significant as the industry would have you believe.
A singular focus on the exact number of jobs created is less important than the understanding that this development will provide mobility and opportunity for people in the effected communities and beyond. Natural gas, when responsibly extracted, can add value to communities and drive job creation in disparate geographic regions and sectors of the economy.
Two articles released yesterday provide great snapshots of the different ways in which economic activity manifests itself in relation to the shale gas boom.
In the first, the Wall Street Journal hits on major industries that are expanding domestically because of low natural gas prices. These plants range from steel to fertilizer to denim but all are choosing to grow their industries in the U.S. because of excess supply induced by hydraulic fracturing.
The second looks at the still significant, but less measurable impacts associated with local-level economic development. The New York Times looks at Chemung County, NY where the economic benefits from nearby Bradford County, PA are spilling across the border. Small business owners are seeing their sales increase, the regional airport is expanding, and the local Holiday Inns have been at or near capacity for months at a time.
These articles build upon the positive impacts seen even in states like New Jersey. While the state effectively has a moratorium on fracking within its borders, its residents are still benefiting from low natural gas prices. Over the last two years, Public Service Electric & Gas has cut rates by 35 percent.
While just anecdotes, these stories further help to demonstrate the far-reaching economic impacts of natural gas development. Many of these impacts are driven by multiple factors and direct attribution is difficult. Standard multipliers attempt to factor these benefits into their numbers, but they are just proxies for what are unknowably complex mechanisms in reality.
As Robert Bradley highlighted today on Master Resource, Hayek wrote in 1960 that:
“Any natural resource represents just one item of our total endowment of exhaustible resources, and our problem is not to preserve this stock in any particular form, but always to maintain it in a form that will make the most desirable contribution to total income,” he wrote. “The existence of a particular natural resource merely means that, while it lasts, its temporary contribution to our income will help us to create new ones which will similarly assist us in the future.”
We can attempt to model the every intricacy of the market, but at the end of the day these are just models. From my vantage point, as long as economic progress is moving in the right direction, the exact numbers just aren’t as important.
