It was a big claim and a bigger number.
In an essay written for the Journal Sentinel last week, President Trump wrote:
“Biden has repeatedly pledged to ban fracking throughout his campaign. … This radical energy policy means the elimination of 300,000 Wisconsin jobs, according to a report by the Global Energy Institute at the U.S. Chamber of Commerce.”
Is that plausible?
The former vice president has said he would only ban new gas and oil permits on federal lands. Existing fracking would be unscathed, under his plan.
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Second, even if Biden did cave to pressure from progressives in the Democratic Party who want an outright ban — Bernie Sanders, say — it’s simply not conceivable that existing fracking would go away all at once or at all.
But this is the fear of some conservatives and the dream of some liberals so let’s take a closer look at the evidence for Trump’s claim.
The chamber’s dire study, published in late 2019, found that Wisconsin would lose 300,000 jobs over a five-year period and $8.3 billion in state and local tax revenue.
Wisconsin has some jobs directly tied to fracking because the state produces sand used in the process, but the vast majority of jobs at risk are in energy-intensive industries such as manufacturing and agriculture, the study found.
But two economists I spoke with have big questions about the study’s methodology and findings.
Tim Bartik, a senior economist at the Upjohn Institute in Kalamazoo, Michigan, says the study assumes there would be no adjustments in the economy if fracking was banned, which isn’t the case.
“It vastly overstates the impact,” he wrote in an email. “All the Wisconsin impact is done by assuming that the fracking ban just sucks money out of the U.S. economy and sends it to Mars, and there are no macroeconomic adjustments due to this other than lower demand. These are not reasonable assumptions to make.
“So, the 300,000 job loss impact is overstated by roughly … 300,000. Well, to be conservative, maybe by 299,000.”
Christopher Guith, senior vice president at the chamber’s Global Energy Institute, defended the study. He says that a sudden loss of shale gas — the study examined a five-year period — would be a major shock to Wisconsin’s economy and a source of energy that couldn’t be easily replaced.
“At some point, we would reach a new equilibrium — whether it’s five years or 15 years — but in the near term, there is no technology path to replace the benefit of natural gas specifically to the manufacturing sector.
The study’s methodology “is arguably the most-used economic analysis modeling tool in all of business and academia. … It’s not like we just put our numbers in an envelope and picked them out,” Guith said.
Bartik isn’t buying it.
“An anti-fracking policy would presumably be accompanied by a pro-renewable energy policy, which would create jobs in these other industries and help offset the price impact from banning fracking,” he said. “Economies do adjust to some degree in the short run, and in a variety of ways. They are looking at only one type of adjustment, and even in the short run, their analysis is very incomplete.”
Steven C. Deller, a UW-Extension professor with the Center for Community and Economic Development at the University of Wisconsin-Madison, said this is basically just an academic exercise: fracking isn’t ending.
Biden doesn’t plan to “ban fracking” and even if he tried to do so, the shale gas spigot wouldn’t be shut off overnight, Deller said.
“They are playing the fear card,” he said. “It’s one thing to do these what-if scenarios, but the scenario they base this on is highly unlikely to occur.”
Bartik says liberal groups also have used the input-output methodology to reach flawed conclusions.
“People have sometimes used these types of models to argue that more defense spending destroys U.S. jobs,” he wrote. “Again, at a macro scale, this type of analysis is inappropriate because it ignores all other adjustments to prices and interest rates and exchange rates, which in the real world will occur even in the short run.”
We offered space to the two leading presidential candidates to give readers a chance to hear from them directly. We made some edits to both pieces. As originally written, for example, Trump’s essay claimed, without attribution, that Wisconsin would lose “300,000 fracking jobs” under the Biden plan. After some back and forth with the campaign, we settled on the wording we published — “300,000 jobs” and attribution to the chamber’s study with a link.
To sum up, President Trump has claimed repeatedly that Joe Biden wants to outright ban fracking. Biden has said repeatedly that’s not his policy.
Trump also claimed that Wisconsin would lose 300,000 jobs if fracking is banned.
There is good reason to question both claims.
David D. Haynes is editor of the Ideas Lab. He reports on innovation in business and government and on government transparency. Email: email@example.com. Follow him on Twitter at @DavidDHaynes or Facebook.
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