The economic impact of shale gas extraction: A review of existing studies

Recent advances in drilling technology have allowed for the profitable extraction of natural gas from deep underground shale rock formations. Several reports sponsored by the gas industry have estimated the economic effects of the shale gas extraction on incomes, employment, and tax revenues. None of these reports has been published in an economics journal and therefore have not been subjected to the peer review process. Yet these reports may be influential to the formation of public policy. This commentary provides written reviews of several studies purporting to estimate the economic impact of gas extraction from shale beds. Due to questionable assumptions, the economic impacts estimated in these reports are very likely overstated.

Research Highlights►Policymakers may associate a consultant's academic affiliation with credible research. ►These reports should achieve not just consultant standards, but an academic standard. ►Three general shortcomings are identified by this review. ►Estimates of jobs created and revenues generated are very likely overstated. ►Economists generally support excise taxes on industries generating external costs.