The Institute for Energy Research is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

About IER
Latest Analysis
June 18, 2012

Jobs Boom: Shale Gas Industry Employment Up 45 Percent By 2015

June 18, 2012
Print Friendly
Facebook

IHS Global Insight released a study showing that shale gas production will continue to grow and people employed in the shale gas industry will increase by 1 million by 2035.  The study entitled “The Economic and Employment Contributions of Shale Gas in the United States” expects shale gas to represent 60 percent of total U.S. natural gas production by 2035, up from 27 percent in 2010.[i] Those numbers are staggering when as recently as five years ago, forecasters were predicting that the United States would need to import liquefied natural gas to meet its natural gas demand. Instead, if the government will permit it, the United States may export liquefied natural gas overseas due to its abundance and low prices.

More recently, IHS Global Insight released a companion study on the employment and economic impact of production of unconventional gas—shale gas, tight gas, and coal bed methane—finding that the unconventional gas industry supports over 1 million jobs today and is expected to support 1.5 million by 2015. That study included tight gas and coal bed methane, which with shale gas, accounted for 53 percent of total U.S. natural gas production in 2010; those sources are expected to account for 79 percent of total U.S. natural gas production by 2035.

The newer report, “The Economic and Employment Contributions of Unconventional Gas Development in State Economies”, examines unconventional gas activity in the lower 48 states: 20 producing states as well as its impact on 28 non producing states.[ii] Producing states are the states that have either new well completions and production or production from existing wells. Non-producing states are the 28 states and the District of Columbia that do not include current or projected unconventional gas resource development.

Shale gas is booming because technology (hydraulic fracturing and horizontal drilling) has made it economic to produce when previously it was inaccessible to production because it was trapped in shale rock through which gas would not readily flow. Its abundant supply has forced U.S. natural gas prices to drop below $2 per thousand cubic feet, making it an affordable fuel for manufacturers, who are moving back some of their operations from overseas.[iii] Today the price has increased a little to $2.19 per million BTU—one half of what it was a year ago.

Global Insight Study on Shale Gas

This study presents the contributions of shale gas in terms of jobs, economic value and government revenues through 2035. The study found that:[iv]

  • Shale gas production supported more than 600,000 jobs in 2010, and is expected to support nearly 870,000 jobs by 2015, and more than 1,660,000 jobs by 2035. The shale gas industry has a high employment multiplier which determines the indirect and induced jobs created to support an industry. For every direct job created in the shale gas sector, more than three indirect and induced jobs are created. That employment multiplier rate is higher than the rate for the financial and construction industries.
  • Shale gas jobs pay higher wages on average than those paid to workers in manufacturing, transportation and education—currently $23.16 per hour.
  • The shale gas contribution to the U.S. gross domestic product (GDP) was more than $76.9 billion in 2010; it is estimated to be $118.2 billion in 2015 and $231.1 billion in 2035, 3 times greater than in 2010
  • The shale gas industry is expected to generate more than $933 billion in tax revenues for local, state and federal governments over the next 25 years
  • Disposable income per household is expected to average $926 more per year between 2012 and 2015 due to savings from lower natural gas prices and the associated lower prices for other consumer products. By 2035, it is expected to increase to more than $2,000 per household.

Without shale gas, the study found that prices on average would be at least two times higher over the 2010 to 2035 period. The lower natural gas prices that we are already experiencing from the shale gas boom have resulted in a 10 percent reduction in electricity costs nationally, which leads to lower prices for many other consumer products. Lower gas prices also boost the international competitiveness of domestic manufacturers, resulting in industrial production being 2.9 percent higher by 2017 and 4.7 percent higher by 2035.

Global Insight Study on Unconventional Gas

While the earlier shale gas study presented the economic contributions of shale gas in terms of jobs, economic value and government revenues and the impact on households and businesses at a national level, this companion report includes the other forms of unconventional natural gas (coal bed methane and tight sands) and distributes the results to the state level.

The study found that[v]:

  • The contribution of unconventional gas to the U.S. gross domestic product is projected to reach nearly $197 billion in 2015, more than $22 billion of which will be from non-producing states, and to reach almost $332 billion by 2035
  • The unconventional gas industry is projected to contribute more than $49 billion annually to government revenues by 2015 and over $85 billion by 2035. It is expected to generate nearly $1.5 trillion in total government revenue over the study’s 25 year analysis period.
  • Of the top 10 producing states (ranked by unconventional gas-related employment), Pennsylvania and Colorado are expected to see compound annual growth rates in employment of 14 percent and 10 percent, respectively
  • The other 8 top ten producing states–Texas, Louisiana, Arkansas, Wyoming, Ohio, Utah, Oklahoma, and Michigan–are expected to see growth rates in employment of around 8 percent, or about 5 times as fast as  U.S. employment  is expected to grow, which is just 1.6 percent over the same time period
  • For Texas, the largest gas producing state, unconventional gas related jobs should reach 385,318 in 2015 and 682,740 by 2035, 2.4 times higher than in 2010.[vi]

Of the nearly 1.5 million unconventional gas activity jobs in 2015, nearly one-fifth are projected for non-gas producing states. The top 10 non-producing states (as ranked by jobs growth due to unconventional gas development) in 2015 are expected to be California, Florida, Georgia, Missouri, North Carolina, Indiana, Wisconsin, Minnesota, Tennessee and Maryland. These states support the industry through supply chain and service jobs needed for development.

Conclusion

Unconventional gas, particularly shale gas, is having profound economic impacts on creating jobs, reducing consumer costs of natural gas and electricity, stimulating economic growth and bolstering federal, state and local tax revenue. By 2035, over 1.6 million jobs will be supported by the shale gas industry, contributing an additional $200 billion in government revenues. And, lower natural gas prices will generate GDP and employment growth and positively impact manufacturing profitability and competitiveness in the United States.



[i] IHS Global Insight, The Economic and Employment Contributions of Shale Gas in the United States, December 2011, http://www.ihs.com/images/Shale_Gas_Economic_Impact_mar2012.pdf

[ii] IHS Global Insight, The Economic and Employment Contributions of Unconventional Gas Development in State Economies, June 2012, http://www.ihs.com/images/State_Unconv_Gas_Economic_Contribution_Main.pdf

[iii] Institute for Energy Research, Abundant Natural Gas Means Low Prices, Increased Trade Potential, April 19, 2012, http://instituteforenergyresearch.org/2012/04/19/abundant-natural-gas-means-low-prices-trade-potential/

[iv] IHS Global Insight, Shale Gas Supports More Than 600,000 American Jobs Today; by 2015, Shale Gas Predicted to Support Nearly 870,000 Jobs and Contribute $118.2 Billion to GDP, IHS Study Finds, December 6, 2011, http://press.ihs.com/press-release/energy-power/shale-gas-supports-more-600000-american-jobs-today-2015-shale-gas-predict

[v] IHS Global Insight, Shale, Other Unconventional Natural Gas Supports More than 1 Million US Jobs Today; Nearly 1.5 Million By 2015, IHS Study Finds, June 13 , 2012,  http://press.ihs.com/press-release/energy-power/shale-other-unconventional-natural-gas-supports-more-1-million-us-jobs-to

[vi] Houston Business Journal, Natural gas production to generate 1.5M U.S. jobs by 2015, report says, June 13, 2012,  http://www.bizjournals.com/houston/news/2012/06/13/natural-gas-to-generate-15-million.html


View Comments

4 Responses to “Jobs Boom: Shale Gas Industry Employment Up 45 Percent By 2015”

Leave a Reply

  • (will not be published)

Back to top