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Americas New Energy Future State Highlights Dec2012

Americas New Energy Future State Highlights Dec2012

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Published by Jon Campbell

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Published by: Jon Campbell on Dec 20, 2012
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OVERVIEW

Indiana is making its way to recovery, but there is still much work to be done. More than 227,000 jobs
were lost here from the peak to the trough of the recession, and these jobs are not expected to be
recouped until late in 2014. The healing economy has, however, been boosted by the manufacturing and
professional business services sectors, with each adding significant numbers of jobs recently. Our
forecast indicates that manufacturing will provide employment growth in a variety of subsectors over the
next two years, with wood products and transportation equipment leading the way. Nonmanufacturing
sectors will also be a source of growth, with professional and business services spearheading this surge.
By the end of 2013, IHS Global Insight forecasts the unemployment rate to fall below 7.5%.

CONTRIBUTION OF UNCONVENTIONAL OIL AND GAS

For purposes of this study, the 20 plays examined do not fall within the geographic boundaries of Indiana.
However, supplier networks and trade flows related to unconventional oil and gas activity resulting from
the plays covered in this study support jobs within the state. The economic activity associated with
unconventional gas production directly and indirectly supported about 16,000 jobs in the state in 2012.25
This unconventional gas-related employment is expected to increase to just over 27,000 jobs by 2020,
and will more than double current levels by 2035, reaching over 33,300. These jobs would employ 1% of
the state labor force by 2035, helping to reduce unemployment and creating a steady source of payroll
growth for the next two decades.

Unconventional gas activity contributed value-added economic activity of just over $1.7 billion in Indiana
in 2012. We forecast that this contribution will grow to over $3.4 billion by 2035. As for labor income, the
average annual wage in Indiana in 2012 is $54,000, while the average wage of jobs related to
unconventional gas and oil activity is $63,000.

There is also the contribution of unconventional gas employment to government revenues. In Indiana in
2012, it generated nearly $380 million in taxes for state and federal coffers. This includes nearly $160
million in state and local taxes, or the equivalent of 1.1% of the state budget.

25

Direct jobs are those created by firms that comprise the oil and gas industry, or by the capital expenditures of related industries;
indirect jobs are those created by suppliers of goods and services to industry. Induced jobs are those that meet the new demand for
consumer goods created by the increased income generated by the direct and indirect jobs.

IHS

65

Employment

(Number of workers)

Direct

Indirect

Induced

Total

2012

141

6,114

9,718

15,973

2020

369

10,279

16,655

27,303

2035

915

12,836

19,615

33,366

Value Added

(2012 $M)

Direct

Indirect

Induced

Total

2012

17

732

918

1,667

2020

50

1,247

1,470

2,768

2035

139

1,547

1,727

3,414

Labor Income

(2012 $M)

Direct

Indirect

Induced

Total

2012

11

468

531

1,010

2020

31

791

912

1,734

2035

87

980

1,073

2,140

Source: IHS Global Insight

($M)

2012

2020

2035

2012-2035*

Federal Taxes

219

369

456

8,576

Personal Taxes

179

306

380

7,127

Corporate Taxes

40

62

77

1,449

Federal Royalty Payments

0

0

0

0

Federal Bonus Payments

0

0

0

0

State and Local Taxes

159

244

265

5,471

Personal Taxes

46

74

76

1,627

Corporate Taxes

113

170

189

3,844

Severance Taxes

0

0

0

0

Ad Valorem Taxes

0

0

0

0

State Royalty Payments

0

0

0

0

State Bonus Payments

0

0

0

0

Total Government Revenue

377

613

721

14,046

Lease Payments to Private Landowners

0

0

0

0

NOTES: *2012-2035 represents the total for all years including those years not reported.

Source: IHS Global Insight

Contribution of Total Unconventional Oil and Gas Activityto Government Revenue and Private Lease
Payments:Indiana

Indiana Economic Contribution Summary:Total Unconventional Oil and Gas Activity

NOTES: Numbers maynot sum due to rounding.

IHS

66

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