Better Communication Needed About Benefits of Fracking

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The results of a CBC/Radio-Canada poll released in September showed that while those polled were relatively evenly split on whether fracking was important to the economy, most respondents were more concerned with things like growing the economy and creating jobs.

Given the fact that fracking has been shown to bring about significant job creation and economic development for municipalities nearby, the results of the poll seem to indicate that the energy industry could do a better job of communicating with the public regarding the fiscal benefits of fracking. What is at question, according to economist Karr Ingham, is how they should do that.

Currently, the industry seems to be struggling to get the message out, Ingham – who created the Texas Petro Index (TPI) for the Texas Alliance of Energy Producers – admitted, adding that it doesn’t help that groups against the oil and gas industry are constantly on the attack.

“They don’t do it as well as they might partly because it’s not what they do. What they do, they do very well, and that is to produce oil and gas. They have improved their technology, they have increased economies of scale, and they are getting much more efficient. That’s what they prefer to do, rather than having to put out fires from anti-industry groups,” Ingham said. “I think it’s widely believed that the industry has a communication problem, and that some of the people communicating the other point of view will say virtually anything to bring public opinion around to their side.”

There are many examples of municipalities that are benefitting significantly from fracking in the United States. Residents in cities and towns like San Antonio and Midland, Texas and Williston, North Dakota quickly learned that oil and gas fracking in nearby shale formations can generate enough job creation and economic growth to transform their localities. And now, it is the Rust Belt area of the United States that seems to be benefitting from fracking, as direct, indirect and induced job growth from fracking is providing significant economic revitalization for the area, according to the New York Times.

In Ohio, for example, economic indicators are beginning to point in the right direction, and it is energy production which is providing the spark, according to consulting firm McKinsey & Company. Early in 2010, unemployment in Youngstown was 13.3 percent. In July 2014, it was 5.7 percent, nearly half-a-percent under the national average.

JOB CREATION, ECONOMIC GROWTH IN TEXAS

Economists agree that the growth of the shale boom is providing a booster shot for the Texas economy. The TPI for July showed that the number of Texans working in the oil and gas industry climbed above 300,000 to hit about 302,700. The July estimate marked the first time since the index began tracking jobs in 1995 that oil and gas employment in the state has been above 300,000, Ingham told Rigzone.  

The TPI is based on a combination of upstream indicators in the overall economy, including the Baker Hughes active drilling rig count, Texas’ crude oil production and natural gas output, and the price of oil and natural gas.

The oil and gas employment picture in Texas has been showing steady growth for 19 of the past 20 months, Ingham noted. From July 2013 to July 2014, oil and gas employment increased by more than 20,000 jobs, the TPI showed. Year-over-year employment growth was 7 percent in July, Ingham added.

Ingham’s actual TPI number was at 309.9 in July 2014, 6.6 percent over July 2013 index figure. Prior to the expansion in the oil and gas market seen over the past four years, the highest figure for the TPI was 287.6, which was seen in the two-month period of September and October 2008. The TPI fell during the economic recession to hit a low of 188.5 in December 2009, before starting the climb to its current peak.

While direct oil and gas industry hiring has been significant, the overall contribution to job growth has come from indirect and induced jobs, Ingham said. Estimates vary, but for every new oil and gas job created, approximately three to five other jobs are created in oilfield services and the overall economy.

In addition to the job creation provided by the energy industry, municipalities depend on the industry for revenues. For example, the oil and gas industry accounts for about 25 percent of the tax dollars taken in by Houston, according to Xbig6, a group of former financial-sector employees.

Exploration and production activity in just the Barnett Shale alone has provided Texas with nearly $645 million in annual tax receipts in constant 2013 dollars, while local government entities receive more than $480 million, according to an analytical report by The Perryman Group.

GETTING THE ENERGY MESSAGE OUT

A recent U.S. survey revealed that more than half of the people polled were not aware that the country was experiencing an energy boom, and of the ones who did, many did not know what was driving it, according to Mining.com, an online news publication.  

While the oil and gas industry is working to connect with the public, there is a need to do more still to connect with those outside of the industry. At the North American Energy Security Dialogue event in Canada late last year, U.S. and Canadian oil and gas companies discussed the need for greater communication, and the mayor of Fort St. John, British Columbia admitted that “someone else owns” the dialog about the industry.

Oil and gas companies have strived to do a better job of communicating, but there is obviously room for improvement, according to Ingham.

“The message for some in the industry to get out is that oil and gas producers are providing people with a stable, sustainable, abundant and – believe it or not – affordable supply of energy now, and for decades to come. For the regions, cities and towns that are in the middle of, or on the periphery of, oil and gas development areas, the net effect of fracking for oil and gas is just staggering in terms of the economic benefit and job creation.”

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