Oil and Gas Booms and Business: Socioeconomic Impacts in 4 Counties

A recent report surveying businesses in four unconventional oil and gas counties indicates the majority of businesses polled experienced positive but transient impacts during the boom years.  Most businesses did not plan or implement specific strategies to take advantage of the opportunities and minimize the challenges from this opportunity. 

Sixteen hundred businesses in Richland County, Montana, McKenzie County, North Dakota, Sheridan County, Wyoming and Tioga County, Pennsylvania received surveys during the decline in oil and gas development, with 12.2% responding. The surveys asked questions regarding:

• Business experiences, changes in business activity, sales and workforce size before, during, and after peak oil and gas activity
• Changes in local business environment that affected them (such as potential local wage changes, ability to find and hire employees)
• Business strategies with changes in oil and gas development activity
• Business details, such as type and structure of the business and years in operation
• Demographics of respondents

Impacts varied across the states, likely due to differences in population size, business mix of respondents, and distance to other economic centers.  Over half (50.5%) of the respondents said sales increased during the peak of drilling activity, and 58.5% said the overall impacts of oil and gas development were positive or very positive.  Looking at the responses by state, approximately three-quarters of North Dakota businesses reported sale increases and positive or very positive overall impacts, with only about 40% of Pennsylvania businesses responding in a like manner.

Responses by business sector varied as well. Based on sales and overall attitude towards development, most surveyed felt more positive about the effects of unconventional activity during the peak of activity than during the decline. Businesses in the oil/gas sector reported 100% positive or very positive impacts during the peak of activity, followed by trade (83.3%) and hospitality (75%).  At the other end of the spectrum, the agricultural sector was least likely to report positive or very positive impacts at 36.4%, and 27.3% reported negative or very negative effects.

Questions pertaining to business strategies implemented during the challenges oil and gas activity indicated that almost three-quarters of businesses did not implement any special strategies dealing with the development. Common strategies mentioned during peak activity included capital investments, diversifying mix of goods and services provided, and improving workforce.  During the decline in activity, financial management and workforce changes were mentioned.

The report is product of the Escaping the Resource Curse project, funded by the USDA NIFA.  The full report can be found on the University of Montana's website.  Universities involved in the study are Montana State University, The Pennsylvania State University, University of Wyoming and Cornell University.