Employment Impacts of Upstream Oil and Gas Investment in the United States

Abstract

Technological progress in the exploration and production of oil and gas during the 2000s has led to a boom in upstream investment and has increased the domestic supply of fossil fuels. It is unknown, however, how many jobs this boom has created. We use time-series methods at the national level and dynamic panel methods at the state level to understand how the increase in exploration and production activity has impacted employment. We find robust statistical support for the hypothesis that changes in drilling for oil and gas as captured by rig counts do, in fact, have an economically meaningful and positive impact on employment. The strongest impact is contemporaneous, though months later in the year also experience statistically and economically meaningful growth. Once dynamic effects are accounted for, we estimate that an additional rig count results in the creation of 37 jobs immediately and 224 jobs in the long run, though our robustness checks suggest that these multipliers could be bigger.

Local Labor Markets and Natural Resources: A Synthesis of the Literature

“…Extraction‐based measures are also commonly employed in many studies, such as the presence of coal or the number of oil wells drilled, as shown in the third column of Table . The literature now includes a wide range of these examples, such as the labor or local inputs used by a mine (Aragon and Rud, ), the presence of a producing mine (Loayza et al ., ), the presence of coal production (Douglas and Walker, ), the quantity or value of oil and gas production (Buccellato and Mickiewicz, ; Caselli and Michaels, ), a certain level of drilling activity (Fleming and Measham, , b, ; Munasib and Rickman, ; Parades et al ., ; Wrenn et al ., ; Jacobsen and Parker, ; Komarek, ; Rickman et al ., ), or the number of active oil and gas drilling rigs (Agerton et al ., ; Brown, ).…”

“…According to Agerton et al . (), an additional rig creates 37 immediate jobs and 224 long‐run jobs across U.S. states in the 2000s. Similarly, Brown () looks at 12 states and estimates that removing one rig leads to an immediate loss of 28 jobs and the eventual loss of 171 jobs.…”

Welfare and Distributional Implications of Shale Gas

“…The Congressional Budget Office recently issued a report aimed at projecting future economic and budgetary impacts of shale oil and gas (CBO, 2014). Local employment effects near extraction sites have been analyzed by Agerton et al (2015), Allcott and Keniston (2014), DeLeire, Eliason and Timmins (2014), Maniloff and Mastromonaco (2014), and Paredes, Komarek and Loveridge (2015). In section 6, we summarize the large literature, spanning many disciplines, on the environmental impacts of fracking.…”

Local Labor Markets and Natural Resources: A Synthesis of the Literature

“…Extraction-based measures are also commonly employed in many studies, such as the presence of coal or the number of oil wells drilled, as shown in the third column of Table 1. The literature now includes a wide range of these examples, such as the labor or local inputs used by a mine (Aragon and Rud, 2013), the presence of a producing mine (Loayza et al, 2013), the presence of coal production (Douglas and Walker, 2016), the quantity or value of oil and gas production (Buccellato and Mickiewicz, 2009;Caselli and Michaels, 2013), a certain level of drilling activity Measham, 2014a,b, 2015;Munasib and Rickman, 2015;Parades et al, 2015;Wrenn et al, 2015;Jacobsen and Parker, 2016;Komarek, 2016;Rickman et al, 2016), or the number of active oil and gas drilling rigs (Agerton et al, 2015;Brown, 2015).…”