Monday, October 24, 2011

Shale Oil Jobs And Migration

While reading about the shale oil boom in North Dakota, I try to imagine what it would look like in Eastern Ohio. I have no idea if the Utica Shale is anything on the scale of the Bakken. But consider this migration tale:

School bus driver Barb Russell heard there was good money to be made here in the oil fields of North Dakota, so last month she packed a bag, locked her Farmington, Minn., home, and headed west. She tripled her income.

The 60-year-old grandmother rose every morning at 3 a.m. in September to drive a bus full of Halliburton workers to drilling rigs in a place where trucks roar non-stop and everybody who wants a job has one. ...

... New drilling technology has freed up vast reserves of oil in the Williston Basin of western North Dakota, fueling an economic bonanza that has become a flat-out gold rush. As the rest of the country desperately tries to skirt a double-dip recession, North Dakota boasts a $1 billion budget surplus and the nation’s lowest unemployment rate. Recruits from Minnesota, Texas and both coasts keep arriving, reversing a long population decline. Schools are rushing to hire more teachers. Towns are adding more cops.

Safe to say that the shale gas in the Marcellus hasn't fueled a similar migration boom. That's a bit of a mystery. Still, things might play out differently in Eastern Ohio. (See this story about Steubenville.)

Don't expect man-camps to pop up in feral Youngstown. Also consider the low unemployment in North Dakota that preceded the rush. The labor market has been tight there for the better part of two decades. School bus drivers won't be moving in from the next state over.

The energy industry talent migration to North Dakota isn't extraordinary and likely temporary. Hence the man-camps or even the booked motels in Williamsport, PA. The more opportunistic migration comes from a neighboring state. Proximity matters. Is someone in struggling Orlando, FL going to roll the dice in Williston, ND? I doubt it, at least not yet.

Beware of the hype that the oil and gas industry is pitching. The impact on unemployment will be subtle. Better for Ohio to figure out how to cash in on revenue from the drilling.


Patrick Prescott said...

Are you saying that the higher unemployment in eastern, Ohio means a larger labor pool which means less likelihood of a migration to the region to fill positions?

I'm wondering about the ancillary jobs that become available. Won't there ultimately be a need to import workers?

Jim Russell said...

For drilling, Eastern Ohio will import talent (as PA has for the shale gas). I expect the white collar jobs to continue to cluster in SW PA. The ancillary jobs should soak up the significant slack in the labor pool.

My main point is that there is a lot of labor that doesn't live in Eastern Ohio but could drive to Eastern Ohio jobs. Compare that to Western North Dakota. Even the workers in ancillary jobs are staying in man-camps out there.

Oh, and John Kasich is on record saying he will not import workers. Apparently, there is a glut of roustabouts in Ohio.

Patrick Prescott said...

Interesting. Thanks for responding. I went to school in Steubenville and still know people in that region who stand to benefit from this "boom" so I've been following all of this from a distance. Was just in Canton/Carrollton a couple weeks ago and the drilling leases were a consistent topic of conversation.