The oil and gas industry, industry-funded academics and ideological think tanks have promoted shale gas development — through the controversial process of hydraulic fracturing, or fracking — as a sure-fire job creator during difficult economic times. Food & Water Watch closely examined a recent report touting the job-creation potential of shale gas development and found numerous inaccuracies and methodological flaws. Even after correcting for these problems, questions remain about the validity of using economic forecasting models to predict the economic impacts of expanded shale gas development.
The purported economic benefits of shale gas development have served as a primary justification for opening up large parts of New York State to fracking. In a 2011 report, the Public Policy Institute of New York State (PPINYS) claimed that, by 2018, the development of 500 new shale gas wells each year in the five counties of Allegany, Broome, Chemung, Steuben and Tioga could sustain 62,620 new jobs in New York, relative to the case of no shale gas development. Another 500 new wells would need to be drilled and fracked every year to sustain these jobs.
Of these 62,620 jobs, PPINYS claimed that 15,500 would be “direct jobs” created from direct spending by shale gas companies. Only a small fraction of the direct jobs would actually be in the gas industry; most would be direct jobs in different industries due to shale gas company spending. The remaining 47,120 jobs would be “indirect jobs” and “induced jobs” created through the economic spillover effects from direct job creation; that is, through a multiplier effect.
However, after identifying and correcting the numerous inaccuracies and methodological flaws that led to this rosy projection, Food & Water Watch determined that the economic forecasting model PPINYS relied on only supports a claim of 6,656 New York jobs by 2018, under the PPINYS scenario of drilling and fracking 500 new shale gas wells that year. Yet this corrected estimate — a little over one-tenth of the original PPINYS claim — still does not account for any of the negative impacts that shale gas development would have on other economic sectors, such as agriculture and tourism.