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Research & Commentary: Fracking Boom Lowered Crime From North Dakota Residents

October 15, 2019

22 Percent Per Capita Reduction In The Bakken Region

A new working paper from a researcher at Utah State University’s Center for Growth and Opportunity details that crime rates in North Dakota’s Bakken shale field have steeply declined since the hydraulic fracturing (“fracking”) boom began there in 2008. According to the researcher, this is most likely due to increased economic prospects for the region.

The Impact of Economic Opportunity on Criminal Behavior: Evidence from the Fracking Boom finds that, altogether, per capita criminal cases filed declined by 22 percent in the Bakken region. Counties in the state with significant amounts of fracking activity saw filed criminal cases drop 27.5 percent, while counties with more minor fracking activity saw a 19.5 percent drop.

Although total crime increased in the area due to an influx of new workers, mostly young men, moving into the area, this is not something out of the ordinary for regions that see an economic boom.

“The key policy implication of this work is that the fracking boom and accompanying economic growth in North Dakota led to a significant reduction in the amount of crime being committed by long-term local residents,” wrote the author in a web post accompanying the paper. “Increases in crime rates in fracking areas are a potential symptom of migratory patterns that accompany economic booms, not the direct result of fracking itself.”

According to the Federal Reserve Bank of Dallas, the shale industry alone drove 10 percent of U.S. GDP from 2010 to 2015. In 2018, according to the National Bureau of Economic Research, oil and gas extraction accounted for $218 billion of U.S. economic output. The economic benefits from fracking are also experienced at more microeconomic levels. A study published in the American Economic Review in April 2017 found “each million dollars of new [oil and gas] production produces $80,000 in wage income and $132,000 in royalty and business income within a county. Within 100 miles, one million dollars of new production generates $257,000 in wages and $286,000 in royalty and business income.”

2016 study from researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology examined nine different shale basins, including the Bakken, in “the most comprehensive assessment to date,” according to the authors. Using a “willingness-to-pay” metric, the study found hydraulic fracturing activity brings $1,300 to $1,900 in annual benefits to local households, totaling roughly $64 billion in yearly household benefits for those living in the nine basins studied. These benefits include a “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 the authors, “Local government revenues also increased at a faster pace than expenditures.”

In its The State of the Heartland Factbook, The Brookings Institution also notes the shale boom in the Bakken region has led North Dakota to have the highest annual job growth among 19 “Heartland” states at 2.1 percent over the course of this decade (2010–2019). Since 2010, economic growth in North Dakota is more than double the rate of any other “Heartland” states. In fact, North Dakota’s job growth rate is the fastest in the country. Also, in North Dakota, the Factbook notes, “the fracking revolution juiced productivity growth, with energy both directly growing productivity at a rate of 0.2 percent annually, as well as having spillover effects into other industries.”

A 2017 study, prepared by PricewaterhouseCoopers for the American Petroleum Institute, found North Dakota’s oil and gas industries supported more than 78,000 jobs, equating to over 13 percent of the state’s work force. Further, these industries produced more than $5.7 billion in labor income and $11.7 billion in economic activity.

Fracking has had a tremendous economic impact on the Roughrider State and its residents, and now we are seeing some of the side effects of this economic growth in the form of less criminality from residents of shale regions. With energy production being the crucial part of North Dakota’s economy, legislators should work to keep the oil and gas industries in the state free from onerous regulations that could depress production, inhibit growth, and rollback the positive societal gains.

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

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 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.

Local Fiscal Effects of a Drilling Downturn: Local Government Impacts of Decreased Oil and Gas Activity in Five U.S. Shale Regions
http://www.rff.org/files/document/file/RFF%20Rpt-SPF.pdf
This study from Resources for the Future finds 82 percent of communities in the five largest shale regions in the United States experienced a net fiscal benefit from hydraulic fracturing despite a large drop in oil and natural gas commodity prices starting in 2014.

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.

What If … Hydraulic Fracturing Was Banned?
https://www.heartland.org/publications-resources/publications/what-if-hydraulic-fracturing-was-banned
This is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

What If … America’s Energy Renaissance Never Happened?
https://www.heartland.org/publications-resources/publications/what-ifamericas-energy-renaissance-never-actually-happened
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have ever been created and $548 billion in annual GDP would have been lost since 2009. The report also found electricity prices would be 31 percent higher and gasoline prices 43 percent higher.

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.

Author
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
TBenson@heartland.org @BenceAthwart