NCPA - National Center for Policy Analysis

Fracking Is Good for the Economy

November 2, 2015

The combining of horizontal drilling and hydrofracturing unleashed a boom in oil and natural gas production in the United States. This technological shift interacts with local geology to create an exogenous shock to county income and employment. Measuring the effects of these shocks within the county where production occurs and tracking their geographic propagation:

  • Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments and 0.78 jobs within the county.
  • Outside the immediate county but within the region, the economic impacts are over three times larger.
  • Within 100 miles of the new production, $1 million generates $243,000 in wages, $117,000 in royalties and 2.49 jobs.

Thus, over a third of the fracking revenue stays within the regional economy. Our results suggest new oil and gas extraction led to an increase in aggregate U.S. employment of 725,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession.

Source: James Feyrer, Erin T. Mansur and Bruce Sacerdote, "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," National Bureau of Economic Research, October 2015.


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