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Revisiting the Economic Impact of the Fayetteville Shale
Kathy Deck, Director
Center for Business and Economic Research
June 7, 2012
Background
The Center for Business and Economic Research has been studying the effects of the Fayetteville Shale natural gas industry since 2005.
In 2008, we put out a widely-read study, discussing the likely impacts of the development of the Fayetteville Shale.
Economic Impact
Economic impact studies usually look at several variables: Economic Output Value Added Employment Tax Impacts
Economic Impacts
We used a combination of publicly available data, an industry survey, and the IMPLAN input-output model to examine the effects of the Fayetteville Shale from 2008 to 2012.
Employment Growth
From 2001 to 2010, total employment growth in Arkansas was 6,920 or 0.6 percent.
In the mining, quarrying, and oil and gas industry, employment increased by 116.8 percent from 3,855 to 8,358.
This is 65 percent of total growth!
Employment Growth
Industry 2001 2010 2001-2010 Change
2001-2010 % Change
Natural resources and mining 18,950 21,094 2,144 11.3%Mining, quarrying, and oil and gas extraction 3,855 8,358 4,503 116.8%
Construction 53,566 48,726 -4,840 -9.0%Manufacturing 226,992 160,091 -66,901 -29.5%Trade, transportation, and utilities 237,569 231,432 -6,137 -2.6%
Information 20,965 15,375 -5,590 -26.7%Financial activities 47,670 47,969 299 0.6%Professional and business services 101,572 117,714 16,142 15.9%
Education and health services 125,513 162,738 37,225 29.7%Leisure and hospitality 86,782 98,779 11,997 13.8%Other services 26,241 24,605 -1,636 -6.2%Government 181,331 205,549 24,218 13.4%Total all industries 1,127,151 1,134,071 6,920 0.6%
Average Annual Pay
The average annual pay in the oil and gas extraction industry was $74,555 in 2010, twice the average pay of all industries in Arkansas.
Other Sector Impacts
Welspun Saint-Gobain American Rail Fayetteville Express Pipeline Broadway Pipeline
Fayetteville Shale Counties
Despite the loss of 9,558 manufacturing jobs, 5 out of the 9 Fayetteville Shale Counties experienced higher than state average employment growth from 2001-2010.
Employment Impacts
White
Pope
Jackson
Franklin
Faulkner
Conway
Van BurenCleburne
Independence
Johnson
2011 Total Employment Impacts by County, Full-Time Employees
0 - 1,750
1,751 - 3,500
3,501 - 7,000
Taxable Sales
From 2006 to 2011, state taxable sales increased by 5.7 percent.
In Fayetteville Shale counties, taxable sales increased by 20.0 percent during the same period.
Population Growth
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Fayetteville Shale Counties Population Annual Growth Rates
Fayetteville Shale Counties State of Arkansas
Source: U.S. Census Bureau Intercensal Population Estimates, Center for Business and Economic Research Calculations
Natural Gas Production
0
100
200
300
400
500
600
700
800
900
1,000
2004
2005
2006
2007
2008
2009
2010
2011
Billi
ons o
f Cub
ic F
eet
Fayetteville Shale Natural Gas Production
Source: Arkansas Oil and Gas CommisionSource: Arkansas Oil and Gas Commision
Natural Gas Production
White
Pope
Jackson
Franklin
Faulkner
Conway
Van BurenCleburne
Independence
Johnson
Fayetteville Shale 2011 Natural Gas Production by County, BCF
0.1 - 100.0
100.1 - 250.0
250.1 - 350.0
Expenditures
Year Expenditures Projected in
2008
Actual Expenditures
Increase/Decrease in Actual
Expenditures 2008 $2,403,100,000 $2,826,305,746 17.6% 2009 $2,312,800,000 $3,132,245,509 35.4% 2010 $2,548,020,000 $3,228,336,598 26.7% 2011 $2,634,312,000 $3,583,976,111 36.0% Total $9,898,232,000 $12,770,863,965 29.0%
Mineral Lease and Royalty Payments
From 2008 to 2011 more than $1.2 billion of payments were made by E&P companies to mineral owners residing in all 75 Arkansas counties.
These royalty payments generate wealth in the communities, consumer expenditures, and tax revenues.
Economic Output
From 2008 to 2011, total economic activity of more than $18.5 billion was generated as a result of Fayetteville Shale activities in the state.
The 2008 projection was $14.2 billion.
Employment Impacts
2008: 5,948 direct jobs→14,511 total jobs 2009: 6,592 direct jobs →20,933 total jobs 2010: 6,794 direct jobs →20,953 total jobs 2011: 7,544 direct jobs →22,499 total jobs
Property Taxes
From 2008-2011, almost $109.2 million in property tax revenues were generated.
Property Taxes from Fayetteville Shale Production, 2008-2011 Assessment Years
County School District Property Taxes
Total Property Taxes
Cleburne $9,530,545 $10,913,725 Conway $19,852,594 $25,252,338 Faulkner $6,158,965 $7,699,301 Franklin $23,906 $31,728 Independence $768,033 $987,692 Jackson $268,629 $345,068 Pope $419,179 $480,885 Van Buren $27,532,017 $35,180,426 White $25,145,277 $28,290,543 Fayetteville Shale Counties $89,700,048* $109,182,898*
State Taxes
From Fayetteville Shale activities, taxes on employee compensation, indirect business taxes and fees, household taxes, and corporate taxes netted the state and local governments almost $2.0 billion from 2008 to 2011.
2012 Impacts
Expenditures: $2.7 billion (5.8 percent more than projected in 2008)
Economic Output: Almost $4.0 billion Value Added: Almost $2.7 billion Employment: 16,607 jobs
