The energy renaissance is a common label awarded to the nation’s recent increased productivity of shale oil and gas. The costs and benefits of this upturn pose numerous implications, which affect not only the energy industry, but consequently local government, economic development, and the labor market.
Let’s Talk Energy
The most obvious implications of the nation’s shale boom are evident in its natural habitat; the energy industry. For example, the United States is now the world’s largest natural gas producer as a result of the shale oil boom. According to the U.S. Energy Information Administration (EIA) shale gas production has grown 51 percent every year since 2007, reserves have increased five-fold since then and numbers are only projected to increase.
Similarly, U.S. production of crude oil is also another area with exceptional growth. In 2014, an increase from 1.2 million barrels per day to 8.7 million barrels per day was recorded as the largest volume increase since 1900, according to the EIA. Texas, North Dakota, and New Mexico are credited for the majority of 2014’s oil production increase, mainly as a result of the hydraulic fracturing process, which produces oil from shale deposits.
Falling crude oil prices have been felt across the country. Not bad for consumers, not so bad for vendors. Although declining prices of crude oil is not the optimal environment for producers, new drilling technologies are creating more efficient acquisition methods, which in turn, have made supplies more plentiful. However, in regard to consumers, many economists assert consumers have more disposable income ready to breathe life into various sectors of the economy, with less money going toward the pump,
Rises in natural gas liquids (NGLs) is another reward reaped from increased shale production. NGLs are composed of hydrogen and carbon, also referred to as hydrocarbon, and include ethane, propane, butane, isobutene and pentanes. The uses of these NGLs vary greatly and include burning for heating and cooking, gasoline mixtures, plastic bag construction, and more. In production of NGLs, the U.S. surpasses Saudi Arabia and former leader Russia, according to the EIA. This increase has decreased the need for imports while increasing exports, which helps boost the economy in its own right.
Government, You, and Shale
A report released by two Duke University researchers found local governments experience significant financial gains with shale oil projects. The report details revenue sources generated by oil and natural gas production. The study revealed revenue sources, which include state taxes and fees of production projects, local property tax on gas and oil property, leased state-owned land, and leased federally owned land. The report describes how the increased revenues of various local governments helped support increased demand of local government services. Although the reported data revealed shale production as typically a benefit for local government, there were instances of local governments who were not able to effectively manage the costs associated with shale production, thus resulting in financial loss.
Local governments aren’t the only ones seeing the sunny side of the shale boom. The shale boom has in part, single-handedly resuscitated the labor market within areas affected by the growth of extraction and production. From manufacturing and construction, to the development of new, and innovative technologies, the number of gas and oil grew 40 percent since 2008, according to the Manhattan Institute for Public Policy. An article on Forbes cites 135,000 high paying jobs added from the oil and gas industry between 2007 and 2012 and with current trends, predict 1.7 million permanent jobs in the U.S. created by 2020. The growth of the oil and gas extraction and production business creates new opportunities for consumers, local governments, and in particular those looking for jobs for a wide range of technical and non-technical expertise.
Lastly, be an opportunist. Whether investments in the surging oil and gas industry or with the optimistic job outlook throughout varying sectors for diverse applicants, college educated and otherwise workers, now is the time to pay attention to the oil boom and its potential impacts and opportunities in an area or job board near you.