1. Revisiting the Economic Impact of the Fayetteville Shale Kathy Deck, Director Center for Business and Economic Research June 7, 2012

2. Background  The Center for Business and Economic Research has been studying the effects of the Fayetteville Shale natural gas industry since 2005.  In 2008, we put out a widely-read study, discussing the likely impacts of the development of the Fayetteville Shale.

3. Economic Impact  Economic impact studies usually look at several variables:  Economic Output  Value Added  Employment  Tax Impacts

4. Economic Impacts  We used a combination of publicly available data, an industry survey, and the IMPLAN input-output model to examine the effects of the Fayetteville Shale from 2008 to 2012.

5. Employment Growth  From 2001 to 2010, total employment growth in Arkansas was 6,920 or 0.6 percent.  In the mining, quarrying, and oil and gas industry, employment increased by 116.8 percent from 3,855 to 8,358.  This is 65 percent of total growth!

6. Employment Growth Industry20012010 2001-2010 Change 2001-2010 % Change Natural resources and mining 18,95021,0942,14411.3% Mining, quarrying, and oil and gas extraction 3,8558,3584,503116.8% Construction 53,56648,726-4,840-9.0% Manufacturing 226,992160,091-66,901-29.5% Trade, transportation, and utilities 237,569231,432-6,137-2.6% Information 20,96515,375-5,590-26.7% Financial activities 47,67047,9692990.6% Professional and business services 101,572117,71416,14215.9% Education and health services 125,513162,73837,22529.7% Leisure and hospitality 86,78298,77911,99713.8% Other services 26,24124,605-1,636-6.2% Government 181,331205,54924,21813.4% Total all industries 1,127,1511,134,0716,9200.6%

7. Average Annual Pay  The average annual pay in the oil and gas extraction industry was $74,555 in 2010, twice the average pay of all industries in Arkansas.

8. Other Sector Impacts  Welspun  Saint-Gobain  American Rail  Fayetteville Express Pipeline  Broadway Pipeline

9. Fayetteville Shale Counties  Despite the loss of 9,558 manufacturing jobs, 5 out of the 9 Fayetteville Shale Counties experienced higher than state average employment growth from 2001- 2010.

10. Employment Impacts

11. Taxable Sales  From 2006 to 2011, state taxable sales increased by 5.7 percent.  In Fayetteville Shale counties, taxable sales increased by 20.0 percent during the same period.

12. Population Growth

13. Natural Gas Production

15. Expenditures

16. Mineral Lease and Royalty Payments  From 2008 to 2011 more than $1.2 billion of payments were made by E&P companies to mineral owners residing in all 75 Arkansas counties.  These royalty payments generate wealth in the communities, consumer expenditures, and tax revenues.

17. Economic Output  From 2008 to 2011, total economic activity of more than $18.5 billion was generated as a result of Fayetteville Shale activities in the state.  The 2008 projection was $14.2 billion.

18. Employment Impacts  2008: 5,948 direct jobs→14,511 total jobs  2009: 6,592 direct jobs →20,933 total jobs  2010: 6,794 direct jobs →20,953 total jobs  2011: 7,544 direct jobs →22,499 total jobs

19. Property Taxes  From 2008-2011, almost $109.2 million in property tax revenues were generated.

20. State Taxes  From Fayetteville Shale activities, taxes on employee compensation, indirect business taxes and fees, household taxes, and corporate taxes netted the state and local governments almost $2.0 billion from 2008 to 2011.

21. 2012 Impacts  Expenditures: $2.7 billion (5.8 percent more than projected in 2008)  Economic Output: Almost $4.0 billion  Value Added: Almost $2.7 billion  Employment: 16,607 jobs

22. Questions and Comments? Thank you! Contact at kdeck@walton.uark.edu or 479-575-4927kdeck@walton.uark.edu