Local Employment Impacts of Competing Energy Sources: the Case of Shale Gas Production and Wind Generation in Texas By

Nowadays, both the wind power and shale gas industries have been developing quickly and receiving significant attention in the media. Since wind and natural gas are competing sources of electricity generation, in order to guide policy, it would be useful to have an idea of how many jobs are created by these two competing resources. In this paper, we use a panel econometric model to estimate the historical jobcreating performance of wind versus that of shale oil and gas. The model is estimated using monthly county level data in Texas from 2001 to 2011. We collect data on the historical employment, number of directional/hydraulic fracturing wells drilled, and new wind capacity built in each county each month and then study the relationship between them. Both distributed lag and spatial panel models have been used based on different data dependence assumptions. Despite different estimation methodologies, the results were quite consistent. Both first difference and GMM methods show that shale development and well drilling activity have brought strong employment to Texas: 77 short-term jobs or 6.4 FTE jobs per well. Given 5482 new directional/fractured wells were drilled in Texas in 2011, about 35000 FTE jobs would have been created. Its impact on wage is not rather distinct. The wage increases 30 cents in month 4 and month 9 after each well completion. All the estimations show that the impact of wind industry development on employment is not significant from zero. Its impact on wage increases gradually after the construction and peaks about one year later. 13 cents are added to the wage in month 10 to 12.