Transcript View Conference Presentation

U.S. Natural Gas Development and Economic
Growth: A State-Level Analysis
Michael L. Troilo
Ronald D. Ripple
October 25, 2016
1
Outline
•
•
•
•
Motivation and intended contribution
Data, variables and methods
Results
Discussion and conclusion
October 25, 2016
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Motivation and intended contribution
• U.S. natural gas production has climbed from 18.9 trillion
cubic feet to 28.8 trillion cubic feet from 2005 to 2015 (US
Energy Information Administration).
• The effects of natural gas production can be either a
blessing (Weber, 2012; 2014) or a curse (Weber, 2014) to
gas-rich US states.
• Our analysis examines the impact of natural gas
development on employment, wages, capital outlays, and
highway expenditures in the five leading US states from
1984-2015. It is a more comprehensive study than prior
work.
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Data, variables, and methods
• Dependent variables-economic outcomes
• Employment-the number of full and part-time jobs (Bureau of Economic
Analysis-BEA)
• Wages and salaries-Total remuneration in thousands of US dollars (BEA)
• Capital outlays-Total capital spending in thousands of US dollars (Census)
• Highway expenditures-Total highway spending in thousands of US dollars
(Census)
• Variable of interest: Production value-Value in US dollars of
gross natural gas withdrawals * city gate price (US EIA).
• Control variables
•
•
•
•
Real per-capita GDP, in chained 2009 US dollars (BEA)
% of GDP from Agriculture
% of GDP from Industry
Population
• Panel regressions for all states and OLS for each state.
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Summary statistics
Mean
Std. Dev.
Min
Max
Employment
4.5 million
4.2 million
258 K
16 million
Wages
$127 billion
$145 billion
$3.7 billion
$660 billion
Capital outlay
$2.2 billion
$2.3 billion
$209 K
$8.8 billion
Highway exp.
$2.3 billion
$2.2 billion
$226 K
$8.7 billion
Production value
$12.1 billion
$12.2 billion
$327 million
$71.8 billion
Real per-cap GDP
$43,423
$7,702
$31,218
$69,973
8.3 million
7.6 million
454 K
27.5 million
Population
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Results (1): Panel regressions
Employment
Wages
Capital
0.019***
3.011***
0.087***
0.057***
0.23
million/4.5
million
$1.1
billion/
$2.2
billion
47.1%
$689
million/$2.3
billion
5.1%
$36
billion/
$127
billion
28.3%
Obs.
155
160
155
155
R-squared
0.99
0.91
0.82
0.82
Production
value
Average effect
of production
compared to
average value
October 25, 2016
Highway
30.3%
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Results (2): OLS Employment
LA
OK
PA
TX
WY
Production
value
0.016***
0.006*
0.007
0.008*
0.002**
Average effect
of production
compared to
average value
0.2
0.05
million/2.3 million/1.9
million
million
Not
significant
0.25
0.013
million/11.7 million/0.3
million
million
8.7%
Obs.
R-squared
October 25, 2016
2.6%
2.1%
4.3%
31
31
31
31
31
0.97
0.98
0.98
0.99
0.97
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Results (3): OLS Wages
LA
OK
PA
TX
WY
Production
value
1.975***
0.646**
2.258***
0.067
0.128*
Average effect
of production
compared to
average value
$22.5
billion/
$57.8
billion
38.9%
$5.2
billion/
$43.8
billion
11.9%
$7.7
billion/
$189
billion
4.1%
Not
significant
$879
million/$7.9
billion
32
32
32
32
32
0.92
0.98
0.99
0.99
0.97
Obs.
R-squared
October 25, 2016
11.1%
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Results (4): OLS Capital Outlays
LA
OK
PA
TX
WY
Production
value
0.087**
0.017
0.110**
0.089***
0.003
Average effect
of production
compared to
average value
$992
million/
$1.4
billion
70.9%
Not
significant
$375
$2.7 billion/ Not
million/
$5.1 billion significant
$3.3 billion
Obs.
R-squared
October 25, 2016
11.4%
52.9%
31
31
31
31
31
0.74
0.83
0.92
0.94
0.87
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Results (5): OLS Highway Expenditures
LA
OK
PA
TX
WY
Production
value
0.076**
-0.000
0.128**
0.072***
0.002
Average effect
of production
compared to
average value
$866
million/
$1.2
billion
72.2%
Not
significant
$437
$2.2
million/
billion/$4.7
$4.1 billion billion
Obs.
R-squared
October 25, 2016
10.7%
Not
significant
46.8%
31
31
31
31
31
0.75
0.92
0.92
0.94
0.90
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Discussion and conclusion
• As expected, natural gas production matters for economic
outcomes. The interesting findings are differences across
the panel and by state. For the panel, the largest effect is
on capital outlays, followed by highway expenditures and
wages.
• Natural gas production has the most pronounced impact on
Louisiana, followed by Texas.
• Similar to Weber (2012, 2014), we find that natural gas
production is a blessing rather than a curse.
• One extension may be to relate natural gas production to
social welfare, e.g. state payments for education and
healthcare.
October 25, 2016
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