Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues

Abstract

This paper examines the economic experience of past energy booms and of current unconventional shale gas and oil development. It focuses on key economic characteristics of gas and oil development, such as its employment potential, the geography of such development, its boom-bust nature, and the economic experience with shale oil and gas development. This background is used to discuss important economic policy issues arising with unconventional oil and gas development, such as taxation, governmental use of those revenues, preemption, and equity in the distribution of costs and benefits. The paper concludes with economic policy recommendations for states and communities affected by such development.

Economics of modern energy boomtowns: Do oil and gas shocks differ from shocks in the rest of the economy?

“…Oil and gas production data may be a less suitable measure as it fails to capture employment changes prior to production or as production matures. As Kelsey et al (2014) note, well drilling and the building of associated infrastructure such as pipelines accounts for a disproportionately large share of new jobs created within the expanding energy sector. Many jobs, however, are created before production starts.…”

Profiling the life course of resource-based boomtowns: A key step in crime prevention

“…One of the most important steps municipal and county (or regional municipalities) government officials can take is to acknowledge that all booms will end, and that their role is to "protect the public and natural resources, nurture a healthy local business environment, and provide independent oversight of the impacts of…development within their jurisdiction" (Kelsey, Partridge, & White, 2016, p. 209). Forward-looking politicians and government officials planning for the bust will have ideally channelled surplus revenues into the creation of their municipality's or county's physical infrastructure or human resource development to create long-term advantages for their communities (Kelsey, Partridge, & White, 2016). That is a tall order, as the evidence shows that the long-term economic, social, and environmental outcomes of a boom are often grim, and many communities are worse off after the boom turns into a bust (Jacobsen & Parker, 2016).…”

Debating Unconventional Energy: Social, Political, and Economic Implications

“…However, the low price of natural gas in the United States, particularly in the absence of carbon pricing, can also lead to the displacement of renewable energy (45). Some scholars are highly optimistic about the financial benefits of shale resources, especially for the United States (46), whereas others are more cautious in their economic assessments (47). Studies on the net impact of shale extraction on local and regional economies in the short-and long term are in their early stages (47).…”