Sustainable Local Employment Gains from Marcellus Shale Gas Extraction, or Modest and Temporary?

Localized employment gains from new or expanded fossil fuel development commonly are cited by its proponents in response to sustainability-related concerns raised by local drilling area residents. This paper analyzes local employment effects in drilling areas within the Marcellus shale formation in the state of Pennsylvania, USA. The Marcellus shale formation was one of the early natural gas fracking boom development areas globally, so these local employment outcomes can inform future policy decisions on not-yet-developed shale gas formations worldwide. As long-term sustainable jobs are a key part of any locale’s sustainable development program, the magnitude and persistence of employment gains in the local drilling area is highly relevant. The existing research literature on employment effects from increased shale gas extraction is dominated by usage of panel estimation on annual data at the U.S. state/county level. The innovative contribution of this paper is its use of monthly data, sub-state local areas (67 counties within PA), and a parsimonious vector autoregression model (VAR) estimated separately for each of the 67 counties. The estimated VAR models are used to ascertain whether Marcellus shale drilling activity in PA led to actual county-level employment above forecasted based on data prior to the shale boom. Actual versus forecasted employment is compared from 2010–2019. Higher than forecasted employment findings were much more likely to occur in approximately the top quarter of drilling counties, with the observed gains being modest. Most importantly, however, any employment gains above forecast were short-lived, gone within four years in most counties. Given the modest and temporary local employment gains found and the many known potential damages to local residents and the environment from intensive drilling, it is questionable that the local areas in the Marcellus shale formation most intensively drilled benefited overall from the shale gas extraction. These findings are germane to ongoing current debates about expanding natural-gas-fired electricity generation, versus solar plus storage, to meet anticipated large rises in electricity demand from rapid data center development globally.