The U.S. economy added just 80,000 jobs in June, a third straight month of weak hiring. The unemployment rate was unchanged at 8.2 percent, but it would have been much worse without a boom in domestic oil and gas production.
There are actual labor shortages in expanding oil and gas areas of the U.S., places like North Dakota's Bakken Shale region. There, business activity from thousands of new fracking wells has unemployment at near 3 percent. Those wells force high-pressure liquids into shale layers, releasing formerly trapped oil and gas deposits. This occurs beneath a mile or more of rock layer without damage to shallower, freshwater supplies.
In northeastern Ohio, moribund since steel mills closed in the 1970s, a $650 million steel mill is being erected near Youngstown with 10 construction cranes for V&M Corporation. The mill will produce steel pipe and other equipment and create 350 long-term jobs by the end of 2012, more than doubling V&M's local work force. A V&M melt shop, where raw steel is produced by melting scrap in furnaces, will be the next big job-creating project at that site.
Nearby, in Carroll County, a new, 350-acre industrial park is ready for oil- and gas-related projects. The state of Ohio is expecting 200,000 new jobs by 2018 from the Utica Shale, which underlies most of eastern Ohio.
The growing replacement of coal by cleaner natural gas for U.S. electric power is good news for the environment and jobs. EPA rules that restrict coal's mercury and sulfur (acid rain) emissions are forcing that shift to natural gas, now plentiful from this new fracking drilling technology.
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The decline in coal's domestic market is being replaced by increased coal exports. From a 50 percent share of the U.S. electric power market five years ago, coal supplied just
42 percent in 2011 and is now below 40 percent in 2012. A rise in the use of natural gas at our electric utilities, from 20 percent to nearly 30 percent, is making up most of the difference. At the same time, wind and solar power have risen from 1 percent to 3 percent or
4 percent of U.S. electric energy supply.
Overall, expansion in the oil and natural gas industries has created 500,000 good-paying new jobs in the past decade. The expansion is not slowing down, as several large shale reservoirs are now productive in various parts of the U.S. Overall, U.S. oil production has grown by 10 percent since 2008, and the import share of U.S. oil consumption has dropped to about 45 percent from 60 percent in 2005.
This trend is expected to continue; a new study by Wood MacKenzie reports oil and gas production could create an additional 1 million new U.S. jobs by 2018.
The touted jobs future in the "green" sector is limited by its cost per kilowatt hour. Wind and solar are at least twice as expensive as electricity produced with natural gas. A study for Spain by King Carlos University showed that for every subsidized wind or solar job, more than two jobs were lost in energy-consuming industries because of increased electrical costs.
Some Spanish production was moved to France because of its lower-cost nuclear energy.
There is an entirely new reality with U.S. energy production, consumption, and imports. New oil and gas supply is emerging, and fossil-fuel demand is being limited by conservation and efficiency. It is too soon to talk of energy independence, but oil imports are declining to the point that most of our oil need could soon be met by friendly Western Hemisphere sources. Canada continues to develop its vast oil-sands deposits, and Brazil will be producing from the world's largest new oil discoveries in the off-shore Santos basin.
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As Daniel Yergin noted recently in The New York Times, "What is striking is this great revival in oil and gas production in the United States, with wide impacts on jobs, economic development and the competitiveness of American industry. This new reality requires a new way of thinking about America's improving energy position and how to facilitate this growth in an environmentally sound way -- recognizing the benefits this will bring in an era of economic uncertainty."
Let's hope our government gets the message and supports energy programs that replace imports with American jobs.
Rolf Westgard of St. Paul is a writer, a professional member of the Geological Society of America, a member of the American Association of Petroleum Geologists and he teaches classes on energy for the University of Minnesota Lifelong Learning program.
