
House of Lords Select Committee on economic affairs: call for
evidence
The Economic Impact on UK Energy Policy of Shale Gas and Oil
The TUC is the voice of Britain at work. With 58 affiliated unions representing more than six million
working people from all industries and occupations, we campaign for a fair deal at work, for social
justice at home and abroad, and for a fair and just transition to a low carbon future. We negotiate in
Europe, and at home build links with political parties, business, local communities and wider society.
The TUC’s approach to shale gas fracking is based on a decision at its 2012 annual Congress, that
“The principle of precaution should be applied when developing new energies and the health of
people and the environment should be put before profit.” Effectively, the motion calls for a
moratorium on the fracking method of gas extraction “unless proven harmless for people and the
environment.”
The TUC welcomes the opportunity to respond to the Select Committee inquiry, and wishes to
focus on two issues of concern, in Questions 3 and 11: the need for reliable forecasts of economic
and employment benefits; and setting the highest standards for occupational health and safety at
work.
Q3: What is the potential impact of shale gas and oil on the local economies
in areas where development is possible?
Employment forecasts
Currently in the UK there are no non-industry, peer reviewed estimates of the balance of local and
national economic and jobs benefits of shale gas fracking. The government has argued that the
process could support 74,000 jobs. However, its own commissioned research suggests a maximum
of 32,000 jobs on the highest growth assumption. A commonsense view would recognise that shale
gas fracking produces positive and negative economic and jobs impacts.
Both of the most widely reported job forecasts - 74,000 jobs according to the Institute of Directorsi;
between 2,660 and 32,000 according to Amecii - rely heavily on data provided by the oil and gas
industry and fracking companiesiii, including mainly US research. The multipliers used to estimate
gross employment gains appear to apply “multipliers” untested in the UK context of the ratio
between direct and spin-off jobs in supply chains. None of the UK studies look at the locally sensitive
negative impacts on tourism, recreation and farming, nor the evidence from the US of a
displacement of jobs and investment from renewable energy companies.
In Amec’s Strategic Environmental Assessment for further onshore oil and gas licensing (2013), the
consultants provide job estimates that could arise from a national shale gas exploration licensing
programme based on two scenarios, representing a “low” and “much higher” level of fracking
activity. Amec’s employment forecasts are based on available literature, not on a fresh econometric
study.
Year
1
8
Low activity
No. Wells drilled a
year
12-24
30-60
Total full time
jobs
1,100-2,100
2,600-5,300
High activity
No. Wells drilled a
year
24-48
180-360
Total full time
jobs
2,100-4,200
16,000-32,000
The low activity scenario appears to assume no further development in the fracking industry beyond
year 8, peaking at between 2,600 and 5,300 jobs. Under the high activity scenario Amec estimates a
peak at between 16,000 and 32,000 jobs.
Details of the peak estimate are provided below. Around 31,771 jobs are predicted in year 8, by
which time 1,440 wells will have been drilled, at a rate of 360 per year.
Jobs numbers are broken down into 13,973 developers’ jobs (i.e. 38 jobs per well drilled that year)
with a further 7,816 jobs in supply chains. The figures also include 3,644 jobs in infrastructure
(including road and pipe laying) and a further 576 in maintenance. The total jobs forecasts of around
32,000 positions equates to a multiplier ratio of 1:2.3 direct to indirect jobs. By year eight, direct
jobs equate to 38 jobs per well drilled.
Year
8
Jobs per
well
Number
of wells
360
Induced
Direct
jobs
Jobs
3,337
3,644
Source: Amec 2013.
Cumulative
wells
1,440
Induced
jobs
501
First round
Developers’
Supply chain
jobs
13,973
7,816
38
Infrastructure
Maintenance Induced jobs
576
3,337
Total
24,291
67
Direct
Jobs
3,644
According to Amec, “all figures in the table are based on figures used in modelling used within
Regeneris Consulting (2010, The Economic Impact of shale gas exploration and production in
Lancashire and the UK).” This study was funded by Cuadrilla. In turn, this Cuadrilla study cites
employment studies undertaken by Timothy Considine from Penn State University (e.g. The
Economic Impacts of the Pennsylvania Marcellus Shale Natural Gas Play, 2010), also an oil industry
funded academic study.
A review of the American evidence by Food and Water Watch found “numerous inaccuracies and
methodological flaws in the calculations, which led to gross exaggeration of the jobs that might be
expected in New York State if the state chose to allow shale gas development.”
Commenting on work by the Public Policy Institute of New York State (PPINYS), Food and Water
Watch found that, “Correcting these problems affects forecasting models by nearly a factor of 10.
But even this corrected PPINYS jobs projection likely remains generous to the shale gas industry, at
the expense of public health and the environment. This is because the corrected projection relies on
industry-supplied spending data and on economic forecasting models, rather than on the ground
employment data in Pennsylvania. On effect is that the negative impacts that shale gas development
has had in other economic sectors in Pennsylvania are not taken into account,” such as tourism and
agriculture.
Drilling 360 wells a year in the UK, as Amec suggests in its high ambition scenario, will clearly create
direct employment, and more jobs can be expected from supply chain development and local
expenditure of wages. It is perhaps surprising that it does not appear to provide an independent,
peer reviewed assessment of local economic benefits based on the actual evidence on the ground in
the US and UK. In particular, it does not look beyond the industry figures to the negative as well as
positive multiplier effects, nor the transient nature of employment as the workforce moves from site
to site.
At its peak, Amec’s forecasts suggest a maximum of 32,000 jobs generated in total. This is 40% of the
74,000 jobs forecast by the Institute of Directors, which the authors reported was “around twice as
many as our previous estimate,” and which relied heavily on industry data.
Other evidence is available from the US that the spin off from investments in shale gas is having a
negative impact on renewable energy jobs and investment. Citing low gas prices as a major factor,
Siemens and Vestas have laid off workers: Siemens announced it was laying off 945 wind energy jobs
in Florida, Iowa and Kansas in September 2012iv. A study of the state of Ohio found that the
development of shale gas has dealt a huge blow to the wind industry in the state, despite Ohio being
a national leader in the development of wind energy. In 2010, the state possessed 106 wind power
supply chain businesses and 63 solar power supply chain businesses, employing 9,000 workers. Since
then, many of these companies have declared bankruptcy, and thousands of workers have lost their
jobs. Were similar impacts to be seen in the UK, perhaps because of generous government support
to the fracking industry limiting assistance for renewable energy sectors, net jobs benefits could be
further overstated.
Q.11 What changes to public policies are necessary to maximise the potential
of any shale gas development?
Health and safety at work
Gas extraction is a historically dangerous industry. Although worker safety hazards are known and
understood, there are very limited data regarding occupational health hazards from exposure to the
chemicals, proppants and processes used in high volume hydro-fracking. A proppant is a solid
material, typically treated sand or a man-made ceramic material, designed to keep an induced
hydraulic fracture open during or following a fracturing treatment. It is added to a fracking fluid
which may vary in composition depending on the type of fracturing used, and can be gel, foam or
slickwater-based. In addition, there may be unconventional fracking fluids.
The way forward involves good management of risks supported by tight regulation and full
transparency. The TUC would want to ensure tight regulations across a range of health and safety at
work issues, developed in consultation with trade unions. The onset of potentially high volume shale
gas fracking across many parts of the country represents a new industrial, environmental, and land
use development pattern with significant potential for impacts on public and employee health.
A study by the National Institute for Occupational Safety and Health (NIOSH) in the US, based on
field research, shows that workers may be exposed to dust with high levels of respirable crystalline
silica during hydraulic fracturing, a cancer-causing substance. For example, silica dust clouds may
form during the delivery of sand from sand mover to transfer belt. Transporting, moving, and filling
thousands of tonnes of sand onto and through sand movers, along transfer belts, and into blenders
generate dust containing respirable crystalline silica. The National Institute for Occupational Safety
and Health (NIOSH) recently collected air samples at 11 different fracking sites in 5 different states
(Arkansas, Colorado, North Dakota, Pennsylvania, and Texas) to evaluate worker exposure to
crystalline silicav. At each of the 11 sites, NIOSH consistently found levels that exceeded relevant
occupational health criteria. The AFL-CIO, the United Steelworkers and the United Mine Workers
have lobbied regulatory authorities with regard to the risks facing workers exposed to crystalline
silica.
The implementation of new natural gas extraction technologies, continual changes in the gas
development industry, rapid growth of drilling operations in new areas, the need for transparency
and disclosure of the full range of chemicals used in fracking, and variations in operations between
companies pose significant challenges for occupational health which have yet to be comprehensively
addressed.
i
http://www.iod.com/influencing/policy-papers/infrastructure/infrastructure-for-business-getting-shale-gasworking
ii
Strategic environmental assessment 2013:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/266330/environmental_rep
ort.pdf
iii
http://www.cuadrillaresources.nl/wpcontent/uploads/2012/02/Full_Report_Economic_Impact_of_Shale_Gas_14_Sept.pdf
iv
Environmental Law and Policy Center. 1/11. “Supply Chain in Ohio.” Retrieved 1/15/14 from:
http://elpc.org/wp-content/uploads/2011/01/OhioWindSupplyFinal_HQ.pdf. See also CBS News. 9/12.
“Siemens to lay off 615 in Iowa, Kansas, Florida.” Retrieved 1/15/14 from: http://www.cbsnews.com/8301501363_162-57515254/siemens-to-lay-off-615-in-iowa-kansas-florida/?tag=mncol;lst;5
The company blamed market conditions due to lack of congressional action on a wind energy tax credit as well
as increased use of natural gas-fired power plants. It said it has worked for the past 10 months to address the
uncertainties but needed to adjust its work force until demand for turbines returns.
See also McKenna, John. Wind Power Monthly. 9/1/12. “Vestas Slashes Another 1400 Jobs – For Now.” Retrieved 1/15/14
from: http://www.windpowermonthly.com/news/1147004/Vestas-slashes-1400-jobs--/
v
http://www.apha.org/advocacy/policy/policysearch/default.htm?id=1439