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Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues

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  • Timothy W. Kelsey
  • Mark D. Partridge
  • Nancy E. White

Abstract

This paper examines the economic experience of past energy booms and that of current unconventional shale gas and oil development. We focus on key economic characteristics of gas and oil production such as its employment potential, its geography, and its boom-bust nature. This background is used to discuss important economic policy issues arising with unconventional oil and gas development such as taxation, governmental use of those revenues, preemption, and equity in the distribution of costs and benefits. The paper concludes with economic policy recommendations for states and communities affected by such development including not viewing oil and gas development as an effective long-run economic development strategy, leveraging short-run financial gains from the development into permanent advantages, and strengthening the capacity for local governments to understand and manage this activity.

Suggested Citation

  • Timothy W. Kelsey & Mark D. Partridge & Nancy E. White, 2016. "Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 191-214.
    • Handle: RePEc:oup:apecpp:v:38:y:2016:i:2:p:191-214.
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    Cited by:

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    2. Dong, Xiao & Klaiber, Allen & Gopalakrishnan, Sathya & Wrenn, Douglas H., 2018. "Silence of Falling Trees: Hidden Forest Loss from Shale Gas Development," 2018 Annual Meeting, August 5-7, Washington, D.C. 274446, Agricultural and Applied Economics Association.
    3. Rajbhandari, Isha & Faggian, Alessandra & Partridge, Mark D., 2022. "Oil and gas boomtowns and occupations: What types of jobs are created?," Energy Economics, Elsevier, vol. 115(C).
    4. Brian E. Whitacre & Dylan L. Johnston & David W. Shideler & Notie H. Lansford, 2020. "The influence of oil and natural gas employment on local retail spending: evidence from Oklahoma panel data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(1), pages 133-157, February.
    5. Gwen Arnold & Meghan Klasic & Madline Schomburg & Abigail York & Melissa Baum & Maia Cherin & Sydney Cliff & Parisa Kavousi & Alexandria Tillett Miller & Diana Shajari & Yuer Wang & Luigi Zialcita, 2022. "Boom, bust, action! How communities can cope with boom‐bust cycles in unconventional oil and gas development," Review of Policy Research, Policy Studies Organization, vol. 39(5), pages 541-569, September.
    6. Isha Rajbhandari & Alessandra Faggian & Mark Partridge, 2020. "Migrants and boomtowns: micro evidence from the U.S. shale boom," Discussion Paper series in Regional Science & Economic Geography 2020-11, Gran Sasso Science Institute, Social Sciences, revised Dec 2020.
    7. Palma, Alessia & Paltrinieri, Andrea & Goodell, John W. & Oriani, Marco Ercole, 2024. "The black box of natural gas market: Past, present, and future," International Review of Financial Analysis, Elsevier, vol. 94(C).
    8. Timothy Fitzgerald, 2024. "Regulatory capture in a resource boom," Public Choice, Springer, vol. 198(1), pages 93-127, January.
    9. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2018. "Who Benefits from Local Oil and Gas Employment? Labor Market Composition in the Oil and Gas Industry in Texas," GLO Discussion Paper Series 246, Global Labor Organization (GLO).
    10. Goetz, Stephen & Partridge, Mark & Stephens, Heather, 2017. "The Economic Status of Rural America in the Trump Era," MPRA Paper 77830, University Library of Munich, Germany.
    11. Tsvetkova, Alexandra & Partridge, Mark D., 2016. "Economics of modern energy boomtowns: Do oil and gas shocks differ from shocks in the rest of the economy?," Energy Economics, Elsevier, vol. 59(C), pages 81-95.
    12. Weinstein, Amanda L. & Partridge, Mark D. & Tsvetkova, Alexandra, 2018. "Follow the money: Aggregate, sectoral and spatial effects of an energy boom on local earnings," Resources Policy, Elsevier, vol. 55(C), pages 196-209.
    13. Karen Maguire & John V. Winters, 2017. "Energy Boom and Gloom? Local Effects of Oil and Natural Gas Drilling on Subjective Well†Being," Growth and Change, Wiley Blackwell, vol. 48(4), pages 590-610, December.
    14. John V. Winters & Zhengyu Cai & Karen Maguire & Shruti Sengupta, 2021. "Causal effects of the fracking boom on long‐term resident workers," Journal of Regional Science, Wiley Blackwell, vol. 61(2), pages 387-406, March.
    15. Mark Partridge & Shawn M. Rohlin & Amanda L. Weinstein, 2020. "Firm formation and survival in the shale boom," Small Business Economics, Springer, vol. 55(4), pages 975-996, December.
    16. Carpenter, Craig Wesley & Anderson, David & Dudensing, Rebekka, 2019. "The Texas Drilling Boom and Local Human Capital Investment," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(2), pages 199-218, May.
    17. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2019. "Who benefits from local oil and gas employment? Labor market composition in the oil and gas industry in Texas and the rest of the United States," Energy Economics, Elsevier, vol. 84(C).
    18. Qin, Chao (Chris) & Loth, Eric, 2021. "Isothermal compressed wind energy storage using abandoned oil/gas wells or coal mines," Applied Energy, Elsevier, vol. 292(C).
    19. Komarek, Timothy M., 2016. "Labor market dynamics and the unconventional natural gas boom: Evidence from the Marcellus region," Resource and Energy Economics, Elsevier, vol. 45(C), pages 1-17.
    20. Fleming, David & Komarek, Timothy & Partridge, Mark & Measham, Thomas, 2015. "The Booming Socioeconomic Impacts of Shale: A Review of Findings and Methods in the Empirical Literature," MPRA Paper 68487, University Library of Munich, Germany.
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    22. Tianqi Zhou & Hongqi Yuan & Fengming Xu & Rigen Wu, 2023. "Tight Sandstone Reservoir Characteristics and Controlling Factors: Outcrops of the Shanxi Formation, Liujiang River Basin, North China," Energies, MDPI, vol. 16(10), pages 1-20, May.
    23. Weinstein, Amanda & Partridge, Mark & Tsvetkova, Alexandra, 2017. "Follow the Money: How Does the Income Flow After an Energy Boom," MPRA Paper 77336, University Library of Munich, Germany.

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    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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