10: Economic Impacts

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Marcellus Matters
Pennsylvania State University via John A. Dutton: e-Education Institute

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Overview

Energy development is big business. Oil and gas companies, electric utilities and wind and solar power developers have been pouring many billions of dollars into energy infrastructure. States often act like they are competing with one another to lure energy-related companies to operate within their boundaries versus going to another state. Politicians of all stripes point towards the economic benefits of harvesting energy resources, whether those resources come from below the earth’s surface (oil and gas) or from the sun and sky.

Virtually all energy development, whether fossil or renewable, involves heavy industry. There will be economic benefits and economic costs to any particular project. In this portion of the course we’ll discuss some of these benefits and costs, and discuss in particular where claims of “job creation” come from, how to decode some of those claims, and some of the great myths of the economic development potential in the energy sector.

In addition to the material presented here, there are several studies of the economic impacts of energy development that are accessible to the public.

The Pennsylvania Green Jobs Report(link is external) focuses on employment in renewable energy sectors in Pennsylvania.
Economic Impacts of the Atlantic Sunrise Pipeline Project(link is external) is one example of how “input output analysis” has been applied to major energy development in Pennsylvania.
Pennsylvania Marcellus Shale Workforce Needs Assessment(link is external) is another example of a study of economic impacts in the natural gas industry, but it is more focused on one segment of the natural gas supply chain.

Learning Outcomes

By the end of this lesson, you should be able to:

Identify the three types of workforce impacts associated with energy development, and describe the differences between each
Interpret the “multiplier” for economic impacts
Explain input-output modeling and identify some advantageous and disadvantageous aspects of this tool for calculating economic impacts