SAFE attorney Richard Fedder explains the flaws in the Illinois Chamber of Commerce’s report on job estimates from fracking Illinois:
1. Professor Considine pioneered the original method of calculating how many jobs might be created using a computer program called IMPLAN.
2. This method does not rely upon any empirical data to determine how many jobs were actually created. It is purely a theoretical projection based upon pie-in-the-sky assumptions.
3. Professor Considine first applied this methodology for “measuring” job creation in Pennsylvania. He predicted that fracking in Pennsylvania would create 88,000 new jobs in Pennsylvania in the upcoming year 2010.
4. We now have hard empirical data on how many new jobs were actually created in the entire state of Pennsylvania. The overall total was about 65,000, of which very few (of the job categories in which jobs were created) had any relation whatsoever to fracking. Such jobs were made in health care, entertainment, education, etc.
5. So Professor Considine’s projections were clearly unreliable.
6. In addition, it turned out that Mr. Considine was paid by the industry to write this report and pioneer this methodology for predicting job creation. However, he wrote his paper in an academic journal as if it represented an objective analysis of likely job creation.
7. This represents a clear conflict of interest, which biased the report. That is a clear violation of academic standards.
8. Professor Considine was subsequently caught in this conflict of interest, and his work was disavowed and discredited by objective academics.
9. Nevertheless, the Chamber of Commerce in Illinois expressly relied on Professor Considine as the academic authority for using the same methodology, through IMPLAN, to project job creation in Illinois.
10. The problem is that IMPLAN categorizes industries at different levels according to the number of jobs that that particular industry creates per million dollars invested by the industry.
11. To put this methodology in plain English, some industries are labor intensive and other industries are capital intensive.
12. Without using any original empirical data (actual jobs created in one small area of the country), Professor Considine decided arbitrarily to put fracking in the most labor intensive category of industries.
13. The truth is that fracking is one of the most capital intensive industries out there. Once the wells are dug and fracked, there are few employees. A high start-up cost involves buying leases from farmers. I think the industry has already spent enormous sums of money on this in Illinois (Was it $250 million? — I can’t quite remember). But this money does not create fracking jobs.
14. To put this another way, a job in a coal mine (labor intensive) will last a generation. But a job fracking a well in Illinois will last less than 90 days.
15. So one may well ask, what does the industry mean when they count a job created — one that lasts 25 years and supports a family, or one that lasts 90 days?
16. The Chamber of Commerce in Illinois followed that same presumption as Professor Considine used, in order to project 47,000 jobs might be created by fracking.
17. But the Chamber of Commerce was actually more careful than that. They considered alternative assumptions under which they projected only 1000 jobs created.
18. As a result the Chamber of Commerce report actually said anywhere from 1000 to 47,000 jobs might be created.
19. 1000 to 47,000 jobs created is to wide a range to mean anything.
20. But for reasons that others can explain, the newspapers only reported the top end of this report — 47,000 jobs to be created.
21. The Republican news conference relied totally on the 47,000 jobs projection.That makes the arguments presented by the Republican news conference nothing more than pie-in-the-sky false promises.
22. We now have empirical data on job creation in several states. Employment data in the fracking counties of West Virginia show a total of only 700 jobs created in the entire three county area over five years (140 jobs per year). This is less than the jobs gained over the same five year period in the non-fracking counties of W. Virginia. Similar results come out of Texas — the fracking counties have grown in employment, but the non-fracking counties have grown much faster over the same period of time. The Marcellus shale in Pa is about the oldest and most mature shale play going. Yet Pa still has high unemployment. There has been no jobs boom.
23. The industry also cites a nationwide report IHS CERA for its pie-in the sky numbers. This report claims that we currently have 1.75 million jobs nationwide in the fracking industry. This report was paid for by the American Petroleum Institute. It is not fact, it is propaganda. If you examine the report, you will find all kinds of job categories having nothing to do with fracking. “Fishing, hunting, and trapping” for example. “Tourism transportation” is another example.
24. To be fair, fracking in ND appears to have had more success in creating jobs. But ND is a very small state with lots of wells (almost as many as they have people). And I still have never seen any reports about the actual number of jobs created by fracking in ND.
25. But even if ND is a success, the question is: Which state is Illinois more like — Pa with little or no job creation, or ND with some success at job creation. 1000 jobs created in ND may be significant. But it would not be a drop in the bucket in Illinois.