IHS study measures economic benefits of unconventional oil and gas production

A new state-by-state study estimates total unconventional oil and gas production in the Lower 48 will contribute $63 billion in federal, state, and local tax revenues in 2012, with contributions rising to nearly $113 by 2020, said IHS.

Nearly $238 billion will be contributed to US gross domestic product in 2012, with an expected increase to more than $416 billion by 2020, said the study, which measures jobs, economic value, and government revenue.

The study on state economic contributions was a follow to an IHS national-level study that said unconventional oil and gas production will support nearly 3 million by the end of the decade.

The top 10 non-producing states in terms of jobs are New York, Illinois, Michigan, Florida, New Jersey, Minnesota, North Carolina, Georgia, Missouri, and Wisconsin.

Meanwhile, 32 states in the Lower 48 that lack major unconventional oil and gas activity will contribute nearly 500,000 jobs through businesses that sell goods and services. Although economic contributions are driven largely by activity in the 16 states with production, a significant portion of the economic activity is in non-producing states.

“The unconventional oil and gas revolution is having a bigger impact across the country, including in non-producing states, than is generally recognized,” said Daniel Yergin, IHS vice chairman. “What we found is that the economic and financial links reach out across all the states in our highly interconnected national economy.”

In the area of economic contributions, IHS said the largest come from Texas and Pennsylvania. New York and Illinois–with with little or no unconventional oil and gas production–are seeing large economic contributions by producing critical goods and services vital to the supply chain.

The 16 producing states will contribute nearly 1.3 million jobs, the study said. The top 10 producing states –Texas, North Dakota, California, Colorado, Oklahoma, Pennsylvania, Utah, Louisiana, Ohio, and Arkansas–will contribute nearly 1.2 million.

“Looking ahead, the potential is there for the unconventional oil and gas revolution to have an even broader impact on the US economy,” said John Larson, vice president, IHS public consulting. “By lowering the cost of key industrial inputs–such as natural gas–this unconventional revolution could help lay the foundation for a renaissance in US manufacturing and increased competitiveness in the global economy.”