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The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming

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  • Weber, Jeremy G.

Abstract

Improvements in technology have made it profitable to tap unconventional gas reservoirs in relatively impermeable shale and sandstone deposits, which are spread throughout the U.S., mostly in rural areas. Proponents of gas drilling point to the activity's local economic benefits yet no empirical studies have systematically documented the magnitude or distribution of economic gains. I estimate these gains for counties in Colorado, Texas, and Wyoming, three states where natural gas production expanded substantially since the late 1990s. I find that a large increase in the value of gas production caused modest increases in employment, wage and salary income, and median household income. The results suggest that each million dollars in gas production created 2.35 jobs in the county of production, which led to an annualized increase in employment that was 1.5% of the pre-boom level for the average gas boom county. Comparisons show that ex-ante estimates of the number of jobs created by developing the Fayetteville and Marcellus shale gas formations may have been too large.

Suggested Citation

  • Weber, Jeremy G., 2012. "The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming," Energy Economics, Elsevier, vol. 34(5), pages 1580-1588.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:5:p:1580-1588
    DOI: 10.1016/j.eneco.2011.11.013
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    Keywords

    Shale gas; Resource extraction; Economic growth;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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