Shale gas industry expected to have huge impact on US economy

Dec 07, 2011 12:00 AM

According to a study by international consulting firm, IHS Global Insight, the natural "shale gale" that started in the Barnett Shale is having "profound economic impacts" on the US economy.
It was helping create jobs, reduce consumer costs for natural gas and electricity and escalate federal, state and local tax revenues, the study added.

Shale gas which now accounts for 34 % of US natural gas production is expected to account for 43 % by 2015 and 60 % by 2035, the firm says.
According to the study, shale gas development contributed $ 76.9 bn to the US economic output in 2010, and would add $ 118.2 bn in 2015 and $ 231.1 bn in 2035. In 2010, the shale gas industry supported 600,000 jobs and the numbers were likely to grow to nearly 870,000 by 2015 rising to 1.6 mm-plus by 2035.

Savings from lower natural gas prices, as well as associated lower prices for other consumer purchases, would add an average $ 926 in disposable income per household annually from 2012 to 2015 and over $ 2,000 annually by 2035. Jobs in the shale gas industry and related fields paid higher wages -- an average $ 23.16 per hour -- than those in manufacturing, transportation and education.
Though the study was commissioned by industry group America's Natural Gas Alliance, according to IHS it made an "independent assessment" and was "exclusively responsible" for all the study's analysis and conclusions.

The extraction of shale gas is done by a process of hydraulic fracturing, a process in which of gallons of chemically treated water and sand are pumped underground, to release trapped gas by breaking up rock. According to environmental groups, the process also called fracking, had tainted drinking water in states such as Pennsylvania, where 4,100 wells had been drilled.
Food and Water Watch, which is pushing for a ban on fracking, said IHS had failed to provide a detailed methodology, making it impossible to validate the projections. The report also ignored potential job losses, it added.

According to critics of the study, payments to landowners seemed to have been charged as capital expenditure by the gas industry for creating direct jobs. They point out that lease and royalty payments did not create direct jobs and did not lead to any indirect jobs.
Emily Wurth, water policy director for the Washington-based Food and Water Watch, said that it had found in a November report that projections for the number of shale-industry jobs in New York had led to a ''gross exaggeration'' of the gains. According to Wurth very few people had analysed the reports which was unfortunate as a lot of elected official took the studies as factually based.

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