LOCAL EMPLOYMENT IMPACTS OF COMPETING ENERGY SOURCES: THE CASE OF SHALE GAS PRODUCTION AND WIND GENERATION
Peter Hartley, Rice University, Phone: +1.713.348.2534, E-mail:
Kenneth B.Medlock III, Rice University, Phone: +1.713.348.3757, E-mail:
Ted Temzelides, Rice University, Phone +1.713.348.2129, E-mail:
Xinya Zhang, Rice University, Phone +1.713.348.3198, E-mail:
Overview
Nowadays, there is a lot of discussion in the media about green jobs in renewable energy, and about the potential of renewable energy to act as an engine of employment and economic growth. Since renewable energy is seen as the future and fossil fuel as the past, it is also assumed that job opportunities in the renewable energy sector are likely to be longer lasting. However, renewable technologies are not yet price competitive with traditional fossil fuel generation. As a result, state and local governments are spending tens of millions of dollars as subsidy to fund renewable industry.
While there has been much popular discussion about a green revolution, another revolution, related to shale gas and oil production, has been taking place in the United States and Canada (and soon, perhaps, elsewhere in the world). While this activity is subject to certain environmental concerns, it has led to economic revitalization and job creation in places like North Dakota, Alberta, West Pennsylvania, Texas, and Louisiana to name a few.
Since wind and natural gas are competing sources ofelectricity generation, in order to guide policy, it would be usefulto have an idea of how many jobs are created by these two competingresources.Our paper use an conometric analysis to compare job creation in the shale gas and oil sectors with that in the wind power sector inTexas.
Methodology
In this paper, we use a panel econometric model to estimate thehistorical job-creating performance of wind versus that of shale oiland gas. The model is estimated using monthly county level data inTexas from 2001 to 2011. We collect data on the historicalemployment, number of directional/hydraulic fracturing wellsdrilled, and new wind capacity built in each county each month andthen study the relationship between them. Both distributed lag and
spatial panel models have been used based on different datadependence assumptions.
Results
Despite different estimation methodologies, the results are quiteconsistent. Both first difference and GMM methods show that shaledevelopment and well drilling activity have brought strongemployment to Texas: 77 short-term jobs or 6.4 FTE jobs perwell. Given 5482 new directional/fractured wells were drilled inTexas in 2011, about 35000 FTE jobs would have been created. Itsimpact on wage is not rather distinct. The wage increases 30 centsin month 4 and month 9 after each well completion.All the estimations show that the impact of wind industrydevelopment on employment is not significant from zero. Its impacton wage rises gradually after the construction and peaks aboutone year later. 13 cents are added to the wage in month 10 to 12.
Conclusions
In the paper, we use an econometric analysis to compare job creation in the shale gas and oil sectors with that in the wind power sector inTexas. The results show that shale development and well drillingactivities have brought strong employment and wage growth to Texas,while the impact of wind industry development on employment and wages statewide has been either not statistically significant orquite small.
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