THE EFFECTS OF HYDRAULIC FRACTURING IN THE MARCELLUS SHALE FORMATION ON LOCAL INCOME AND JOB GROWTH

Abstract

Recent innovations in hydraulic fracturing have stimulated extraction and production of shale gas in areas of the nation such as the Marcellus Shale formation. The Marcellus region, one of the first areas to see extensive application of the new fracking methods and a site of great controversy regarding its utility, will be the focus of my econometric analysis. I use county-level employment and income data to estimate the effects of having additional hydraulic fracturing present in the area. Utilizing a panel data based fixed-effects regression methodology, I come to the conclusion that as the number of wells in a county grows, very few significant income and employment effects show. These results imply that although hydraulic fracturing may create jobs and increase income for a small number of people for short durations of time, the jobs generated may not be present long enough and may not be of high enough quality to increase overall income for employees in the natural gas extraction industry, or any related industry. In addition, I also examine the impact that additional wells in a county have on that area’s proprietor income, coming to the conclusion that although individuals in the county can benefit from renting their land out to natural gas companies and collecting royalties, that effect is not statistically significant when viewed from a broader perspective.