A pair of economists from Ohio State University issued a report that says the likely number of jobs that a burgeoning shale gas industry could create in Ohio has been grossly overstated – by a factor of 10 – by industry proponents and politicians who are trying to fast-track its development.
The statement is important because it debunks economic development estimates not only for this industry in this state, but potentially for any politicized energy project (think TransCanada’s Keystone XL pipeline to bring energy from Alberta’s oil sands to the U.S.) being promoted on the promise of job growth.
The report,The Economic Value of Shale Natural Gas in Ohio, was produced by Amanda Weinstein; and Mark Partridge, Swank Professor of Rural-Urban Policy – both of OSU’s Department of Agricultural, Environmental and Development Economics.
The report does not take a position against the controversial fracking process by which Ohio’s shale oil is to be extracted. Its conclusion states “there are significant benefits to producing natural gas.” But it also clearly states that job creation is not one of them.
It concludes that the industry would likely create 20,000 new jobs.
That contrasts with 204,520 jobs promised in a different study produced by the Ohio Oil & Gas Energy Education Program (OOGEEP) – a consortium funded by the oil and gas industry itself.
The OSU study spends several pages debunking the methodology behind the OOGEEP estimate, stating:
Previous studies on the economic impacts of natural gas appear to have widely overstated the economic impacts. This is not surprising, as these studies are typically industry-funded and industry-funded studies are usually not the best sources of information for economic effects (regardless of the industry).
It identifies comparable instances of exaggerated job-growth estimates (also debunked by academic study) in Pennsylvania’s shale oil business, which is ahead of Ohio by several years. The OSU study provides this blunt clubbing of job growth as an economic justification for energy projects:
Alan Krueger, Chief Economist and Assistant Secretary for Economic Policy at the US Department of Treasury stated in 2009, “The oil and gas industry is about 10 times more capital intensive than the US economy as a whole… suggesting these tax subsidies are not effective means for domestic job creation” (US Department of Treasury). The energy industry as a whole also does not account for a significant share of employment. Even if the natural gas industry experiences significant job growth, its employment share is too small to have any significant effect on unemployment rates and on the economy…
All of this matters because energy projects are rarely, if ever, easy to authorize. The fracking process is controversial because there are legitimate concerns that it can have negative geologic and environmental impact – particularly if encouraged to proceed without proper regulation and oversight.
Similarly, objections to the Keystone XL pipeline project include concerns about habitats that may be destroyed by its construction; danger from spills during ongoing operation; and greenhouse concerns due to the fact that Canada’s oil sands are among the dirtiest-burning forms of oil.
TransCanada’s own economic development study promises the project will create anywhere from 250,000 to 553,000 U.S. jobs, depending on the future price of oil. Even TransCanada seems to back away from those figures, instead settling on 138,000 U.S. jobs, including short-term construction. Under the perhaps-overconfident headline
Benefits of Keysone XL are Certain,
its website states:
TransCanada is poised to put 13,000 Americans to work to construct the pipeline – pipefitters, welders, mechanics, electricians, heavy equipment operators, among other jobs – in addition to 7,000 manufacturing jobs that would be created across the U.S. Additionally, local businesses along the pipeline route will benefit from the 118,000 spin-off jobs Keystone XL will create through increased business for local goods and service providers.
But using the OSU study as a guide, actual job creation might be anywhere from 55,000 to 12,000 permanent jobs after construction is completed.
None of this is to say that energy projects don’t provide meaningful benefits or shouldn’t be considered. But it does indicate that an honest evaluation of these projects would put job creation in the background. Any study, politician or industry that does otherwise is probably being less than honest.
More stuff like this at BigBadBiz.org