Courtesy Penn State MCOR
In November, 2016, The London School of Economics and Political Science published the paper, "On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution" by Rabah Arezki, Thiemo Fetzer, and Frank Pisch. The study looked at the indirect effects of shale development and low natural gas prices on industry in the US and on international trade. The cost advantage of natural gas due to the shale gas boom may have helped the US economy recover more quickly than it would have otherwise done after the recession of 2007-08. Energy-intensive industries reaped the greatest benefit from cheaper US gas as well.
In December, 2016, the University of Chicago released a study entitled "The Local Economic and Welfare Consequences of Hydraulic Fracturing", which examines the local economic benefits and problems associated with hydraulic fracturing. The study by Alexander W. Bartik, Janet Currie, Michael Greenstone, and Christopher R. Knittel indicated counties with a high fracking potential produced a higher amount of oil and natural gas annually 3 years after the discovery of successful fracking techniques, relative to other counties in the same shale play. The study found that counties with high hydraulic fracturing production have an increase in total income, employment, and salaries. In addition, local governments experience revenue increases greater than the increase in expenditures. These same counties also experience a decrease in quality of life with notably higher violent crime rates. The data indicates that the average local benefits outweigh the costs, though this may change as more research on environmental and health impacts of hydraulic fracturing is done.
A third paper, "Fracking, drilling and asset pricing: estimating the economic benefits of the shale revolution" was written by Erik Gilje, Robert Ready and Nikolai Roussanov at the National Bureau of Economic Research. The study looks at the effect technological innovations in shale oil development on asset prices. While the study did not reflect the impact of potential costs or adverse consequences of shale development not yet understood, the research suggests shale oil is an important factor in the future US economic growth.
Please click on the hyperlinked titles for access to the studies.