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Revisiting the Economic Impact of the Fayetteville Shale

Revisiting the Economic Impact of the Fayetteville Shale. Kathy Deck, Director Center for Business and Economic Research June 7, 2012. Background. The Center for Business and Economic Research has been studying the effects of the Fayetteville Shale natural gas industry since 2005.

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Revisiting the Economic Impact of the Fayetteville Shale

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  1. Revisiting the Economic Impact of the Fayetteville Shale Kathy Deck, Director Center for Business and Economic Research June 7, 2012

  2. Background • The Center for Business and Economic Research has been studying the effects of the Fayetteville Shale natural gas industry since 2005. • In 2008, we put out a widely-read study, discussing the likely impacts of the development of the Fayetteville Shale.

  3. Economic Impact • Economic impact studies usually look at several variables: • Economic Output • Value Added • Employment • Tax Impacts

  4. Economic Impacts • We used a combination of publicly available data, an industry survey, and the IMPLAN input-output model to examine the effects of the Fayetteville Shale from 2008 to 2012.

  5. Employment Growth • From 2001 to 2010, total employment growth in Arkansas was 6,920 or 0.6 percent. • In the mining, quarrying, and oil and gas industry, employment increased by 116.8 percent from 3,855 to 8,358. • This is 65 percent of total growth!

  6. Employment Growth

  7. Average Annual Pay • The average annual pay in the oil and gas extraction industry was $74,555 in 2010, twice the average pay of all industries in Arkansas.

  8. Other Sector Impacts • Welspun • Saint-Gobain • American Rail • Fayetteville Express Pipeline • Broadway Pipeline

  9. Fayetteville Shale Counties • Despite the loss of 9,558 manufacturing jobs, 5 out of the 9 Fayetteville Shale Counties experienced higher than state average employment growth from 2001-2010.

  10. Employment Impacts

  11. Taxable Sales • From 2006 to 2011, state taxable sales increased by 5.7 percent. • In Fayetteville Shale counties, taxable sales increased by 20.0 percent during the same period.

  12. Population Growth

  13. Natural Gas Production

  14. Natural Gas Production

  15. Expenditures

  16. Mineral Lease and Royalty Payments • From 2008 to 2011 more than $1.2 billion of payments were made by E&P companies to mineral owners residing in all 75 Arkansas counties. • These royalty payments generate wealth in the communities, consumer expenditures, and tax revenues.

  17. Economic Output • From 2008 to 2011, total economic activity of more than $18.5 billion was generated as a result of Fayetteville Shale activities in the state. • The 2008 projection was $14.2 billion.

  18. Employment Impacts • 2008: 5,948 direct jobs→14,511 total jobs • 2009: 6,592 direct jobs →20,933 total jobs • 2010: 6,794 direct jobs →20,953 total jobs • 2011: 7,544 direct jobs →22,499 total jobs

  19. Property Taxes • From 2008-2011, almost $109.2 million in property tax revenues were generated.

  20. State Taxes • From Fayetteville Shale activities, taxes on employee compensation, indirect business taxes and fees, household taxes, and corporate taxes netted the state and local governments almost $2.0 billion from 2008 to 2011.

  21. 2012 Impacts • Expenditures: $2.7 billion (5.8 percent more than projected in 2008) • Economic Output: Almost $4.0 billion • Value Added: Almost $2.7 billion • Employment: 16,607 jobs

  22. Questions and Comments?Thank you!Contact at kdeck@walton.uark.edu or479-575-4927

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