Unconventional Oil and Gas: Good for the Local Treasury?

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It is no secret that many in the Eagle Ford shale region have come into wealth from unconventional oil and gas E&P.

Aside from news stories on massive royalty checks or new business opportunity in booming areas, one might wonder how far this economic boost spreads.

What numbers can be cited to show just how big the impact of the Eagle Ford shale is? How does high production relate to local economic growth?

Where are the Eagle Ford Sweet Spots?

In this post, we will look at areas that have experienced the highest gas and oil production over the past year according to DI Analytics production data: Karnes County, DeWitt County, Gonzales County, La Salle County, Dimmit County, and Webb County.
Unconventional Oil and Gas: Good for the Local Treasury?Unconventional Oil and Gas: Good for the Local Treasury?
Unconventional Oil and Gas: Good for the Local Treasury?

What Should We Measure?

A couple of socioeconomic factors that signal rural town growth are sales tax revenue and school enrollment numbers, according to the Western Rural Development Center at Oregon State University, a regional center for applied social science and community development. Which will help us tell the story? Let’s find out.

Are The Schools Filling Up?

Unconventional Oil and Gas: Good for the Local Treasury?
Unconventional Oil and Gas: Good for the Local Treasury?
Data Source: https://datacenter.kidscount.org

We see a moderate increase in five out of the six counties in school enrollment in 2012. All increased in 2011, still modestly. What could be the reason? I can only speculate, but possibly the impermanent nature of oil-field work. Families may be trickling in a bit slower for permanent residency.

What About Sales Tax?

Sales tax revenue will help identify the economic boost of the boom by taking into account both temporary workers and those with a newly increased disposable income.

Tax revenue was not available for every county we are looking at today, but here are four of the six counties.
Unconventional Oil and Gas: Good for the Local Treasury?
Data source: https://www.txcip.org

This gives a bit more color to the story. Karnes and Dimmit sales tax revenue increased nearly 20 times in just four years. Gonzales increased around 5 times and Webb just over 1.3 times.

Karnes had the highest oil production last year in the Eagle Ford of 48,826,779 bbl and Dimmit is host to the city of Carrizo Springs, a hub of Eagle Ford activity. Dimmit also was fifth highest in oil and gas production. Both of these counties had an astounding increase in their sales tax revenue.

In Conclusion

While I can’t say there is a direct correlation between economic increase and production, it is interesting to observe these counties’ numbers. Sales tax revenue increase means more transactions, more goods sold, more services needed. This is expected within a booming area with an influx of workers. It is still worth a deeper look into the numbers to quantify the Eagle Ford boom.

Your Turn

What do you think? Are there other key factors to quantitatively measure local economic impact? What local benefits have you noticed? Leave a comment below.

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Elizabeth Lipps

Elizabeth Lipps is a Research Associate on the DI Analytics team. She tracks industry trends and data to help keep Drillinginfo clients up-to-date on everything happening in E&P and midstream. Elizabeth is working on her Masters of Applied Geography in GIScience and will complete her studies in Spring 2014.