Exposing the Oil and Gas Industry’s False Jobs Promise for Shale Gas Development
• How Methodological Flaws Grossly Exaggerate Jobs Projecons
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 diicult economic times. Food & WaterWatch closely examined a recent report touting the job-creation potential o shale gas development andound numerous inaccuracies and methodologicalfaws. Even ater correcting or these problems,questions remain about the validity o using economicorecasting models to predict the economic impacts o expanded shale gas development.
The purported economic benets o shale gas devel-opment have served as a primary justication 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 dierent industriesdue to shale gas company spending. The remaining47,120 jobs would be “indirect jobs” and “induced jobs”created through the economic spillover eects romdirect job creation; that is, through a multiplier eect.However, ater identiying 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 andracking 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 benets o allowing shale gasdevelopment in New York consists o two parts:
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.