local economic impacts of horizontal drilling in Texas

• Online Access: http://hdl.handle.net/2047/d20128582

The combination of horizontal drilling and hydraulic fracturing around 2003 has generated substantial local economic gains in various areas with unconventional oil and gas plays across the U.S. This paper estimates the impacts of the horizontal drilling activity on employment and other labor market outcome measures for counties in Texas from 1995 to 2012. Results suggest that the boom of horizontal drilling activities has brought increases in employment and wage and salary income, but decreases in median household income. Specifically for the period 2003 to 2012, every new horizontal drilling permit issued created on average 3.5 more jobs in Texas. This paper has two main contributions. First, it includes all 254 counties of Texas into analysis without trimming any metropolitan counties to estimate the potential different effects of drilling between metropolitan and nonmetropolitan areas. Second, it employs horizontal drilling permits rather than gas production as the primary measure of economic outcomes of interest.