The National Bureau of Economic Research (NBER) released a report this week that quantified U.S. economic activity from 2012 to 2014 and found that $3.5 trillion of the increased equity of the U.S. stock market has been the result of shale oil development.

Further, NBER looked at real world impacts on the economy from this increase and found that shale oil development has also stimulated job growth in a big way. From the report:

“We show that the shale discovery announcement returns have significant explanatory power for the cross-section of employment growth rates of U.S. industries, indicating that the effect we identify operates through real economic channels. In the aggregate, we estimate that during the shale oil period 4,600,000 (net) new jobs are linked with the development of shale oil technology. This represents a 4.2% increase in the number of jobs across the industries in our study, compared to the aggregate number of jobs at the beginning of the shale oil period.” (emphasis added)

This growth in activity stimulates other aspects of the economy as well. For example the report identifies that:

“… an increase in fracking/drilling activity increases demand for output of (imperfectly competitive) industries that provide labor or materials for shale oil extraction, the positive news about shale sector productivity is good news for these industries — we refer to this as the ‘supply-chain effect.’”

EID has noted before that ancillary industries — or those that make up the supply chain — have experienced major growth as a result of shale development. Take a moment to watch the following EID video to learn more about the impacts on the supply chain.

 The report also identifies that,

“To the extent that increasing income of households involved in shale oil production, directly or indirectly, improves the health of the local economies, it might benefit consumer-oriented industries that experience increasing demand for their goods — we can refer to this as the ‘income effect.’”

In addition to allowing people ...