The latest annual report on shale-related oil and gas investment in Ohio by researchers at Cleveland State University (CSU) found a $9 billion increase from 2018 to the fourth quarter (Q4) of 2019, which the authors say shows the importance of the natural gas industry and hydraulic fracturing (“fracking”) to the Buckeye State economy.
“[T]otal investment [in shale] from July through December 2019 was approximately $3.06 billion, including upstream, midstream, and downstream,” said the October 2020 report. “Indirect downstream investment, such as development of new manufacturing as a result of lower energy costs, was not investigated as part of this Study.
“Together with previous investment to date, cumulative oil and gas investment in Ohio through December of 2019 is estimated to be around $86.4 billion,” the report states. “Of this, $60.0 billion was in upstream, $20.2 billion in midstream, and $6.2 billion in downstream industries.”
New Activity, More Production
CSU also reported production was the highest the state has ever seen, 11.3 percent greater than at the beginning of 2019, as more oil and natural gas was produced despite fewer operating wells. In addition, 122 new wells were either being drilled or began producing in Ohio in the second half of 2019, bringing the state’s total to 2,709 wells.
Belmont County experienced the greatest amount of new upstream investment between July and December of 2019, with 31 new wells and an investment of around $401.8 million, according to CSU.
“Jefferson and Harrison Counties were second and third, with 29 and 18 new wells, respectively, to go along with $332.3 and $206.3 million invested,” says CSU.
The development of the Utica shale in Ohio, through the use of fracking and horizontal drilling, has turned the state into the fifth-largest producer of natural gas in the United States. This massive increase in domestic shale development 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.
A separate September 2019 report prepared by Kleinhenz & Associates confirmed these gains, showing the total amount saved by Ohio residents due to fracking between 2008 through 2018 topped $45 billion.
Jobs and Income
Ohio’s oil and natural gas industries supported more than 262,800 jobs in 2015, producing $14.7 billion in wages and $37.9 billion in economic impact, according to a 2017 API study prepared by PricewaterhouseCoopers.
The authors of a 2019 study from the Global Energy Institute (GEI) at the U.S. Chamber of Commerce estimate if fracking were banned in Ohio in 2020, the State would lose more than 700,000 jobs thanks to higher residential and business energy costs and upstream production losses, and experience a $245 billion reduction in gross domestic product (GDP), and a $20.6 billion loss in state and local tax revenues by 2025. Over that same time period, Ohio households would experience $119 billion aggregate decline in their incomes with residents suffering a per capita cost-of-living increase of $5,625.
These losses would mount over time but begin taking effect immediately. In 2021 alone, the study estimates 155,000 jobs would be lost if fracking were banned losses, causing a $18 billion decline in 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, with modeling data provided by the consulting firm OnLocation, estimates if fracking were to be banned in Ohio 500,000 lost jobs would be lost in 2022 alone.
Tim Benson (email@example.com) is a policy analyst at The Heartland Institute.