On Friday, the US Chamber of Commerce released a report, apparently timed for the weekend before the election when a number of fracking initiatives are on the ballot nationally, which alleged that "14.8 million jobs could be lost, gasoline prices and electricity prices could almost double, and each American family could see their cost of living increase by almost $4,000" if fracking were banned in the US. The 58 page pdf, “What If Hydraulic Fracturing Was Banned?” covers the recent 10 year history of fracking, then projects what they imagne would happen to the US economy over the 2017 to 2022 period if a fracking ban were initiated, and finally wraps up with scary state specific scenarios for Ohio, Pennsylvania, Colorado and Texas. Their report is long on conclusions, but pretty short on methodology, and some of the links they cite are already broken. I was hoping to ignore it, but by Saturday morning it was already being picked up by the news services, with several headlines indicating that a fracking ban would kill 15 million jobs. So we'll just quickly make a few points on how outrageous that allegation is...
As of the October employment report from the Bureau of Labor Statistics, which was coincidentally was also released on Friday, direct oil and gas industry employment was at 172,300 payroll jobs. In addition, there were another 283,500 employed in "support activities for mining", a broad category which might include those employed by drilling contractors such as Halliburton. And while the labor department doesn't break out the specific details, let's also imagine that as many as 10% of the 1,072,800 jobs involved in manufacturing of machinery might be working in factories making oil field equipment. So in the most extreme scenario, where every oil and gas company shuts down completely, and all those manufacturers building oil field equipment shutter their factories, we'd lose a maximum of around 563,100 jobs, or less than 4% of the Chamber's stated job-loss total. For some perspective on that number, that's about as many new jobs on average as the US economy has been creating every three months over the last couple years. However, we know that even should fracking end tomorrow, there still would be an oil industry, and manufacturers of oil field equipment can be repurposed for other industries, such as building windmills, so many of that maximum of 563,100 oil & gas related jobs would not really be lost at all...
Obviously the Chamber's report is projecting knock on effects, wherein they might count jobs in a fast-food restaurant in an oil producing state as at risk should the oil industry go into a slump. But just how realistic is a projection of 14.8 million job losses? As of Friday's employment report, the total seasonally adjusted payroll employment in the US was just under 145 million. That means that the Chamber is projecting that 10.2% of all those who are currently employed in the entire country would lose their jobs with 5 years should fracking be halted. That would be on top of those who are currently unemployed. Considering that most fracking is only taking place in a handful of states, mostly in rural areas, and that several large states such as New York and Florida have no fracking at all, that more than 10% of those who are now working in the entire US would lose their jobs is absurd on its face. Moreover, we have a counterfactual. Their own report shows fracking history going back to 2006, at which time less than 10% of US oil production was from fracked wells. Ten yeas ago this week, at a time when gas drilling rigs outnumbered oil rigs 5 to 1, the majority of the drilling rigs in the field were still conventional horizontal rigs, with horizontal drilling rigs only accounting for 18.1% of the 1693 rigs that were active at the time. At the same time, the unemployment rate in the US was at 4.4%. So in October 2006, when the fracking industry was in it's infancy and most of it was focused on natural gas, the unemployment rate was .5% lower than the 4.9% it's at today. Thus, as recently as 10 years ago we were surviving quite well without fracking, and i'm sure we will also do so 6 years into the future, should that kind of oil exploitation come to an end in the interim.
While I'm on the subject of studies that fabricate potential job losses to promote an agenda, I'd also like to point out a paper also released just a few days ago by the White House Council of Economic Advisers that has had almost no media coverage. It's a 21 page pdf titled Industries and Jobs at Risk if the Trans Pacific Partnership Does Not Pass, and it's being released at this time because Obama still hopes to push through the TPP during the lame duck session of Congress, when outgoing congresscritters are easiest to buy, since they no longer have to answer to the public. I'm not going to try to refute their paper now, but see if you can detect the same kind of prevarication and exaggeration that we saw in the Chamber report in the following section of their conclusion, where they're projecting millions of imaginary jobs at risk should the Japanese turn to their historical enemies in China to buy the same goods they're now importing from the US. Via the White House CEA:
In summary, the stakes involved in passage of TPP are high. There are, conservatively, 35 goods-producing industries directly at risk of increased competitive pressure from China in the Japanese market if RCEP goes into effect, taking this one country pair as an example of what may happen to market access in the 16 countries currently engaged in RCEP negotiations. These 35 industries account for just under 10 percent of total U.S. exports of goods to Japan. These industries employ close to 5 million workers and maintain 162,000 business establishments in the United States. There are a number of reasons why this does not capture all of the industries whose exports will come under pressure, and many are already under pressures from headwinds in the broader global economy. Passing TPP can help ensure they have a fair shot if RCEP goes into effect. Further, even if RCEP does not go into effect, U.S. businesses and consumers would forgo significant economic benefits if TPP does not pass. For example, 78 manufacturing, agricultural, and fishing industries export heavily to Japan, making them likely to benefit directly from increased market access under TPP through reduced tariff or non-tariff barriers. We also show that these industries maintain a total of 360,000 business establishments and employ close to 12 million workers across all 50 states.
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Note: the above was first included with my weekly news synopsis on my Focus on Fracking blog.