Skip Navigation

Research & Commentary: Banning Fracking Would Be Bad News for Ohioans

March 19, 2020

700,000 Jobs Lost And $245 Billion In Lost GDP By 2025 If Fracking Banned In The Buckeye State

report released in November 2019 by the Global Energy Institute at the U.S. Chamber of Commerce details how a ban on hydraulic fracturing (colloquially known as “fracking”) would have devastating consequences for the Ohio economy and would displace “hundreds of thousands of jobs” throughout the state.

According to the study, if a fracking ban took place, the Buckeye State would experience the cumulative loss of 700,000 jobs thanks to higher residential and business energy costs and upstream production losses, as well as $245 billion in lost gross domestic product (GDP), and a $20.6 billion loss in state and local tax revenues by 2025. Over that same period, Ohio households would experience a $119 billion loss of income and Ohioans would suffer a per capita cost-of-living increase of $5,625.

These losses would naturally begin taking effect immediately. In 2021 alone, the study estimates 155,000 job losses, $18 billion in lost GDP, $1.49 billion in lost state and local tax revenue, and a $9 billion loss in household income.

A 2020 report from the American Petroleum Institute (API), with modeling data provided by the consulting firm OnLocation, has unemployment numbers in Ohio due to a fracking ban that mirror GEI’s study, with 500,000 lost jobs in 2022 alone.

The development of the Utica shale play in Ohio has turned the state into the fifth-largest producer of natural gas in the United States. This massive increase in domestic shale development, led by fracking, has caused natural gas prices to plummet in Ohio, saving state residents and businesses more than $40 billion from 2006 to 2016, according to a September 2018 study from the Consumer Energy Alliance. This is backed up by a September 2019 report prepared by Kleinhenz & Associates for the Ohio Oil and Gas Energy Education Program showing total savings thanks to fracking for Ohio residents from 2008 to 2018 amounts to $45 billion.

Additionally, the oil and natural gas industries supported more than 262,800 jobs in Ohio in 2015, producing $14.7 billion in wages and $37.9 billion in economic impact, according to a 2017 API study prepared by PricewaterhouseCoopers.

Hydraulic fracturing activity delivers $1,300 to $1,900 in annual benefits to local households, including “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices,” according to a December 2016 study conducted by researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology. 

Hydraulic fracturing enables the cost-effective extraction of once-inaccessible oil and natural gas deposits. These energy sources are abundant, inexpensive, environmentally safe, and can ensure the United States is the world’s largest energy producer well beyond the 21st century. Therefore, Ohio policymakers should refrain from placing unnecessary burdens on the natural gas and oil industries, which are safe and positively impact the Buckeye State economy.

The following documents provide more information on hydraulic fracturing and fossil fuels.

What If…Hydraulic Fracturing Were Banned? (2020 Edition)
https://www.globalenergyinstitute.org/sites/default/files/2019-12/hf_ban_report_final.pdf
This study from the Global Energy Institute at the U.S. Chamber of Commerce says a ban on fracking in the United States would be catastrophic for our economy. Their analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product by $7.1 trillion. Tax revenue at the local, state, and federal levels would decline by nearly a combined $1.9 trillion. Natural gas prices would leap by 324 percent, causing household energy bills to more than quadruple. By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130 per barrel, while less domestic energy production would also mean less energy security.

America’s Progress at Risk: An Economic Analysis of a Ban on Fracking and Federal Leasing for Natural Gas and Oil Development
https://www.api.org/~/media/Files/Oil-and-Natural-Gas/Hydraulic-Fracturing/2020/fracking-ban-study-americas-progress-at-risk.pdf
The study from the American Petroleum Institute (conducted by economic modeling firm OnLocation)  warns that banning federal leasing and fracking on public and private lands, which some presidential candidates have proposed, would cost up to 7.5 million American jobs in 2022 alone, lead to a cumulative GDP loss of $7.1 trillion by 2030, slash household incomes by $5,400 annually, increase household energy costs by more than $600 per year and reduce farm incomes by 43 percent due to higher energy costs. If a ban is enacted, the U.S. would flip from being a net exporter of oil and petroleum products to importing more than 40 percent of supplies by 2030

Debunking Four Persistent Myths about Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/debunking-four-persistent-myths-about-hydraulic-fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.

The Benefits of Ohio’s Natural Gas Production to Energy Consumers and Job Creators
https://consumerenergyalliance.org/cms/wp-content/uploads/2018/08/080718_OH-CFAE-Natural-Gas-Report_FINAL.pdf
This report from the Consumer Energy Alliance examined how the shale revolution across the Marcellus and Utica regions has provided benefits to Ohio’s energy consumers by boosting disposable income and revitalizing communities, saving residential users $15 billion, and commercial and industrial users $25 billion. More than 700 new businesses have also been established statewide to support the shale industry, bringing in more than $63.9 billion in new investments.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels---summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Heartland’s Government Relations department, at governmentrelations@heartland.org or 312/377-4000.