A ban on fracking would eliminate an estimated 516,000 jobs in Michigan between 2021 and 2025 and reduce the state’s gross domestic product by $159 billion over the same period, according to a new report from the U.S. Chamber of Commerce’s Global Energy Institute.
The shale revolution has transformed the U.S. economy over the past decade and requires fracking, the process of injecting liquid at high pressure into subterranean rocks to force open existing fissures and extract oil or gas.
Some 2020 presidential candidates and activist groups have called for a ban on hydraulic fracking.
The process has a relatively small energy production, and the chamber’s study predicts a ban would cause the average Michigan consumer to see their cost of living increase by $5,170 by 2025, while household income would decrease by a combined $88 billion in the state. With a fracking ban in place, there would be $13.5 billion less in state and local tax revenue.
“Increased oil and gas production driven by hydraulic fracturing has been fueling America’s sustained period of growth over the past decade while making us both cleaner and stronger,” says Marty Durbin, president of the U.S. Chamber’s Global Energy Institute. “Our study shows that banning fracking would have a catastrophic effect on our economy, inducing the equivalent of a major recession and raising the cost of living for everyone across the country. This bad idea should be abandoned.”
The report is the first in the 2020 edition of the institute’s Energy Accountability Series, which looks at what could happen if energy proposals from candidates and interest groups were adopted. It is titled “What if Hydraulic Fracturing was Banned? The Economic Benefits of the Shale Revolution and the Consequences of Ending It.” The 2020 edition updates a study first done in 2016 with new data and analysis and several new states.
“Michigan’s oil and gas industry is an important part of our state’s economy,” says Rich Studley, president and CEO of the Michigan Chamber. “Having safe, affordable, and reliable natural gas and oil is important to Michigan’s manufacturers and homeowners. A ban on fracking would drive prices up, which would hurt our industrial base, jeopardize hundreds of thousands of jobs, and result in higher costs for consumers. This new study demonstrates that a ban on fracking would have negative consequences for the entire economy and should be rejected.”
The study uses the IMPLAN input-output model that tracks monetary transactions within the economy between different industries, the government, and households. The report provides national impacts of a fracking ban and state-specific impacts for five energy producing states – Colorado, New Mexico, Ohio, Pennsylvania, and Texas, and two states with limited energy production – Michigan and Wisconsin.
Nationally, the ban would eliminate an estimated 19 million jobs between 2021 and 2025 while reducing U.S. gross domestic product by $7.1 trillion. Energy prices would also increase, with natural gas prices rising by 324 percent and the cost of living increasing $5,661 for the average American. By 2025, the price of gasoline would double, and government revenues would drop by almost $1.9 trillion.
The report notes that the U.S. carbon dioxide emissions have been reduced by more than 2.8 billion metric tons since 2005, roughly the equivalent of annual emissions from Australia, Brazil, Canada, France, Germany, and the United Kingdom combined.
The complete report is available here.