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MasterResource

MasterResource

MasterResource is a blog dedicated to analysis and commentary about energy markets and public policy.Precisely because energy is the lifeblood of the modern economy –…

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Energy Development Could Hold the Key for America's Unemployed Masses

Energy Development Could Hold the Key for America's Unemployed Masses

“For many American families, struggling to make ends meet in the jobless recovery, energy development is an answer to a prayer. The fact that the oil and gas boom has been done without taxpayer subsidies—and despite reactionary public policies at the federal level and in some states (such as New York)—means that more economic opportunity is on tap.”

In this so-called “jobless” recovery, aka the Great Recession, an estimated 20 million American workers are unemployed or underemployed. One out of every two college students cannot find work in their chosen fields. Competition for well-paying jobs is likely to become even tougher when thousands of men and women in uniform return home from Afghanistan and look for ways to support their families.

Although many U.S. industries have been reluctant to hire new workers due to political and economic uncertainty, the oil and natural gas industry is booming worldwide. Jobs are available on offshore rigs, at service companies that support energy production activities, and onshore where technologies are unlocking energy supplies from impermeable rock deep underground.

Hydraulic fracturing, directional drilling, and 3- and 4-D computer modelling, among other high technologies, are helping to produce oil and natural gas from shale formations that once were believed to be too difficult or too expensive to tap. In the process, they are creating jobs at large and small companies in dozens of states. In the bigger scheme of things, this renaissance means that the hydrocarbon energy era has an open-ended future.

In North Dakota, where drillers are producing crude oil from the Bakken Shale, workers are finding jobs offering wages that are significantly higher than the national average. Truck drivers are being paid $80,000 a year to start. Some workers on oil rigs are being paid six figures. And yet many jobs are going begging. According to the mayor of Williston, “A lot of jobs get filled every day, but it’s like for every job you fill, another job and a half opens up.” In April, North Dakota had a jobless rate of 3.0 percent, the lowest in the country.

In Pennsylvania’s Marcellus Shale region, tens of thousands of jobs have been created, opening opportunities for unskilled labourers to obtain training and earn excellent wages. According to the state’s Department of Labour and Industry (Center for Workforce Information and Analysis), jobs for drill operators are expected to grow by nearly 85 percent this year, while the job growth rate otherwise in Pennsylvania is projected to be less than three percent.

The expansion of the oil and natural gas industry is also occurring at Texas’s Eagle Ford, Louisiana’s Haynesville Shale, Arkansas’ Fayetteville Shale and other energy-rich rock formations. Taken together, they are increasing domestic energy supplies, making energy more affordable, and spawning subsidiary investments in the private sector creating additional jobs.

A steel plant in Ohio is adding 200 jobs to produce more drill pipe. A new ethane plant in Texas, which will use natural gas to produce plastics, is expected to generate 400 jobs. Frito-Lay is purchasing natural gas-powered trucks to deliver consumer products around the country. New cleaner-burning gas-fired power plants are being built to replace old coal-fuelled electricity generating facilities. (But expect coal-fired power to improve its technology too to remain competitive in many respects.)

These jobs are being created by companies, not the federal government. And they are based on “made in the USA” technologies that have the potential to greatly increase nation’s energy security and alter the world’s balance of power. As U.S. oil and natural gas supplies increase, some experts believe American energy independence is on the horizon.

Philip Verleger, an economist at the Peterson Institute for International Economics, believes the United States could be energy self-sufficient in the next 10-plus years and could become a net energy exporter.

Yet, some environmental groups are reluctant to embrace this good news scenario. They see domestic energy’s success as a threat to their green agenda. In their continuing push to reduce carbon dioxide emissions, they are working to stop hydraulic fracturing, shut in oil and natural gas wells, and in the process, slow or stop progress.

Their strategy is to promote fear of hydraulic fracturing worldwide. Concerns over groundwater contamination have prompted France and Bulgaria to ban fracturing and other countries are considering moratoria. Yet, despite efforts to find a link between fracking and drinking water pollution, U.S. Environmental Protection Agency (EPA) investigations have found no credible evidence to support the claim.

Energy experts believe the reluctance of other countries to develop their shale resources is giving the United States a market advantage, prompting interest in exporting liquid natural gas (LNG) from the Gulf Coast. Italy, Lithuania, and Poland are building terminals to accept LNG imports, and LNG imports to the European Union are expected to grow by nearly 75 percent by 2035. Energy expert Daniel Yergin calls Europe “an obvious market” for U.S. LNG.

The home-grown energy renaissance could become a major reversal of fortune, wiping out 40 years of worry over U.S. reliance on foreign energy sources. According to an analysis by Wood Mackenzie, it also could create an additional one million jobs by 2018 if the government opened more onshore and offshore areas to exploration and development.

For many American families, struggling to make ends meet in the jobless recovery, energy development is an answer to a prayer. The fact that the oil and gas boom has been done without taxpayer subsidies—and despite reactionary public policies at the federal level and in some states (such as New York)—means that more economic opportunity is on tap.

By. Robert Bradley Jr.

This article was provided by MasterResource




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  • Elisabeth on July 06 2012 said:
    Booming energy development is not such an answer to prayer as you make it out to be.

    One major limitation in the oil fields of North Dakota, Manitoba, Saskatchewan and probably more, is that while there are indeed high-paying jobs available there's a severe shortage of living accommodations for workers, let alone their families.

    A six-figure job is a lot less attractive if you can't find a place to live.

    The price of what little real estate is available has gone sky high, and local builders hesitate to develop rental accommodations because there's no telling how soon this boom will fade.

    Thousands of oil workers are living in camping trailers, far from their families. That's not what most families would pray for ...
  • Michael B. on July 08 2012 said:
    There are a lot of dirty jobs and jobs that need to be done in less than ideal environments. The fact that the jobs are not in ideal problem free locations does not negate thier value. As one of those who is benefiting directly from the North Dakota Oil boom I for one am very gratefull that there is one industry that is economically viable. I have been in the business of providing and improving housing all my life. When the bottom fell out of the economy where I live my wife and I were left scrambling to make ends meet and like many others we burned through savings fast and borrowed money at high interest rates to keep our business afloat. The opportunities that are in the Bakken Oil fields are a blessing to us financially. While it is difficult to be away from home and separated geographicaly from my family for two to three weeks every month, I see tremendous value in my self esteem and self worth that I am still able to pay my bills and financially care for my family. We also employ many local and out of town people in our business... of providing housing. All growing communities have growth pains, but I would take the growing pains any day over the alternative. Foreclosures and bankruptsy's are depressing and demoralizing. Not having a job is less than ideal too. My vote will always go with the jobs. People feel better and act better when they are able to contribute to society. Most want a hand up, not a hand out. Better to support industry that is providing jobs than creating more expensive government programs or putting road block in the way of folks who are trying to serve others.

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