Study Says Shale Gas Has Big Impact on Economy

December 06, 2011

A new study says shale gas is one of the top drivers for job creation, lowered natural gas and electricity costs, economic growth and increased tax revenue at the federal, state and local levels. In the next four years, shale gas production will add 870,000 jobs and contribute $118 billion to the economy according to "The Economic and Employment Contributions of Shale Gas in the United States" from IHS Global Insight.

The study focuses on the enduring impact of shale gas production on the economy. "The rapid growth in shale gas production — currently 34 percent of total U.S. production — is one of the most significant energy developments in recent decades and is having a significant impact on the nation's economy in terms of stimulating job creation and economic growth," said IHS Vice President John Larson, the lead author of the study.

The study's findings reveal shale gas' astounding effect on the economy:

  • Shale gas will make up 43 percent of U.S. natural gas production by 2015 and reach 60 percent by 2035.
  • Shale gas supported 600,000 jobs in 2010. By 2035, the number could reach 1.6 million.
  • Savings from lower gas prices equate to an annual average of $926 per year in disposable household income between 2012 and 2015. By 2035, it will be over $2,000 per household.
  • Shale gas will supply over $933 billion in local, state and federal tax revenue in the next 25 years.
  • Shale gas has contributed over $75 billion to the gross domestic product (GDP) in 2010. It expects to triple to $231 billion by 2035.

Despite this, the oil and gas industry has a chink in its armor that could affect future efforts. Residents in shale plays remain concerned about the effects of hydraulic fracturing on air and water quality. With shale gas having a profound impact on the economy, it's critical for regulators and the industry to address gas leaks and wastewater cleanup.

Shale gas not only increases employment in the oil and gas industry, but also in other industries. "Shale gas combines a capital-intensive industry with a broad domestic supply chain," Larson said. "The United States is a leader in all parts of the shale gas industry which means that most of its suppliers are domestically based, and that means a larger portion of the dollars spent are supporting domestic jobs in trucking, steel fabrication, aggregates, heavy equipment manufacturing, hotels, and restaurants, among others," he said.

America's Natural Gas Alliance (ANGA) commissioned IHS Global Insight for the study. The alliance represents 30 of North America's largest natural gas companies.