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Exposing the Oil and Gas Industry’s False Jobs Promise for Shale Gas Development

Exposing the Oil and Gas Industry’s False Jobs Promise for Shale Gas Development

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HOW METHODOLOGICAL FLAWS GROSSLY EXAGGERATE JOBS PROJECTIONS
HOW METHODOLOGICAL FLAWS GROSSLY EXAGGERATE JOBS PROJECTIONS

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Published by: Food and Water Watch on Nov 15, 2011
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05/12/2014

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Exposing the Oil and Gas Industry’s
False Jobs Promise
for Shale Gas Development
HOW METHODOLOGICAL FLAWS GROSSLY EXAGGERATE JOBS PROJECTIONS
 
About Food & Water Watch
Food & Water Watch works to ensure the food, water and
sh we consume is safe, accessible and sustainable. So wecan all enjoy and trust in what we eat and drink, we helppeople take charge of where their food comes from, keepclean, affordable, public tap water owing freely to ourhomes, protect the environmental quality of oceans, forcegovernment to do its job protecting citizens, and educateabout the importance of keeping shared resources underpublic control.
Food & Water Watch
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fax: (202) 683-2501
 
info@fwwatch.org 
www.foodandwaterwatch.orgCopyright © November 2011 by Food & Water Watch.
 
All rights reserved.
 
This report can be viewed or downloaded at
www.foodandwaterwatch.org.
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tel: (415) 293-9900
 
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COVER IMAGE ©
WWW.MARCELLUS-SHALE.US / USED WITH PERMISSION
 
Exposing the Oil and Gas Industry’s False Jobs Promise for Shale Gas Development
• How Methodological Flaws Grossly Exaggerate Jobs Projecons
1
Execuve Summary
The oil and gas industry, industry-unded academicsand ideological think tanks have promoted shale gasdevelopment — through the controversial process o hydraulic racturing, or racking — as a sure-re jobcreator during diicult economic times. Food & WaterWatch closely examined a recent report touting the job-creation potential o shale gas development andound numerous inaccuracies and methodologicalfaws. Even ater correcting or these problems,questions remain about the validity o using economicorecasting models to predict the economic impacts o expanded shale gas development.
 
The purported economic benets o shale gas devel-opment have served as a primary justication oropening up large parts o New York State to racking.In a 2011 report, the Public Policy Institute o New York State (PPINYS) claimed that, by 2018, thedevelopment o 500 new shale gas wells each yearin the ve counties o Allegany, Broome, Chemung,Steuben and Tioga could sustain 62,620 new jobs inNew York, relative to the case o no shale gas develop-ment. Another 500 new wells would need to be drilledand racked every year to sustain these jobs.O these 62,620 jobs, PPINYS claimed that 15,500would be “direct jobs” created rom direct spendingby shale gas companies. Only a small raction o thedirect jobs would actually be in the gas industry;most would be direct jobs in dierent industriesdue to shale gas company spending. The remaining47,120 jobs would be “indirect jobs” and “induced jobs”created through the economic spillover eects romdirect job creation; that is, through a multiplier eect.However, ater identiying and correcting thenumerous inaccuracies and methodological faws thatled to this rosy projection, Food & Water Watch deter-mined that the economic orecasting model PPINYSrelied on only supports a claim o 6,656 New York jobsby 2018, under the PPINYS scenario o drilling andracking 500 new shale gas wells that year. Yet thiscorrected estimate — a little over one-tenth o theoriginal PPINYS claim — still does not account orany o the negative impacts that shale gas develop-ment would have on other economic sectors, such asagriculture and tourism.The explanation or how PPINYS arrived at such a rosyprojection o the economic benets o allowing shale gasdevelopment in New York consists o two parts:
Overesmaon
of the
direct economic impacts:
The PPINYS report misused a fawed nding in aPennsylvania State University study to concludethat direct spending by shale gas companies inNew York could lead to 15,500 direct jobs:
•
The Penn State study undercounted thenumber o wells drilled in Pennsylvania, andthus overestimated the number o direct jobsper well;
•
The Penn State study exaggerated the portiono gas company spending that stayed inPennsylvania, and thus overstated direct jobcreation;
•
The Penn State study included payments tolandowners as spending that creates direct jobs,but these payments only create induced jobs,through landowners re-spending their income;
•
PPINYS ailed to mention that many o thehigh-paying gas industry jobs created would goto transient, out-o-state workers with shale gasindustry experience, not to New Yorkers; and
•
PPINYS misused the Penn State study resultsby not accounting or economies o scale andgains in productivity, which will lower thespending necessary to develop uture shale gaswells.Correcting or these ve points reduces thePPINYS projection o direct jobs
from 15,500down to 3,469
created by 2018, assuming 500new wells drilled and racked each year.

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