Jobs not best benefit of Ohio shale drilling: OSU study

Natural gas drilling in Ohio offers several benefits, but enough new jobs to impact the state's economy isn't one of them, a new economic study released this week by Ohio State University says.

"Although we should not expect natural gas to be a big job creator, there are significant benefits to producing natural gas that are getting lost in the hype of job creation," co-authors Mark Partridge and Amanda Weinstein said.

The two largest benefits of opening up shale drilling in Ohio are the environmental benefits of cleaner gas displacing coal for power generation and lower electricity costs benefiting the state's massive manufacturing economy, the authors said.

Manufacturing accounts for 27% of Ohio's $477 billion economy, according to the state government; oil and gas production accounted for 0.4% in 2010.

The 27-page study examining the economic impact of drilling in the Utica and Marcellus shales in the state faults previous industry-funded studies that predict as many as 200,000 new jobs for the state for using impact models long discarded by academic economists for routinely overestimating job creation numbers.

A September study sponsored by the Ohio Oil & Gas Energy Education Program predicted oil and gas investment in Ohio would increase more than 20 times the current $988 million/year and create 205,520 jobs. (OSU professors participated in portions of that study also.)

Partridge and Weinstein said the number of permanent jobs is likely to be a more modest 20,000.

"Previous studies on the economic impacts of natural gas appear to have widely overstated the economic impacts," Partridge and Weinstein wrote. In addition to being funded by industry, "not the best sources of information for economic effects (regardless of the industry)", those studies ignore that oil and gas operations are three times more capital intensive than other industries, resulting in fewer jobs per dollar spent.

Those studies, primarily focused on the Marcellus' impact on Pennsylvania, also have ignored the displacement effects of gas drilling - be it coal miners laid off because power plants burn more gas or tourism workers eliminated because of drilling's effects on the environment - the study said.

Partridge believes Pennsylvania gained 20,000 Marcellus Shale-related development jobs between 2004 and 2010, much fewer than the 100,000 jobs reported in "industry-funded studies."

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