Shale drilling has created more jobs in the oil drilling industry

The argument

The case for shale as a sustainable business model rests on what the industry actually did when the conditions were right. Between 2010 and 2014, two things came together: technology developments reached the point where tight formations could be drilled economically, and oil prices were both high and stable enough for operators to plan against them. The result was a massive investment wave in the US shale sector, with investment more than quadrupling over that period. That capital did not sit idle. It translated into an eightfold increase in shale oil production, taking output from 0.44 million barrels per day to over 3.6 million. To put that in proportion, it was the fastest growth in oil production in a single country since the development of Saudi Arabia's super-giant oilfields in the 1960s, a comparison that places US shale alongside the largest conventional developments in the industry's history. The employment consequence follows from how that production was achieved. An eightfold expansion in output is not a matter of opening a valve further on existing infrastructure; it requires rigs to be built and crewed, wells to be drilled and completed, and the servicing, transport and processing capacity around them to be scaled to match. Growth on that scale within the oil drilling industry necessarily draws in labour, and proponents argue that this is precisely what distinguishes a sustainable business model from a speculative one: the sector proved it could convert investment into physical output and durable employment rather than simply into paper valuations. On this view, given continued improvements in technology and supportive prices, shale is a viable business that sustains both production and the workforce behind it.

Premises

Counter-arguments

Shale oil is anything but a reliable business model. The sector as a whole generated cumulative negative free cash flow of over USD 200 billion in between 2010 and 2014. Throughout this phase, companies were forced to rely extensively on external sources of financing, predominantly debt and receipts from the sale of non-core assets, in order to finance their operations. In addition to issuing bonds, companies benefited from the reserve base lending structure, which is essentially a bank-syndicated revolving credit facility secured by the companies’ oil and gas reserves as collateral. This structure was used heavily by small and medium-sized companies with non-investment credit rating that did not have as easy access to the corporate bond market.

Rejecting the premises

[Rejecting P1] The premise names the conditions that produced the boom — high, stable prices and a new technique — and in doing so identifies exactly what a sustainability claim has to survive without. Prices did not stay high: the collapse from late 2014, and again in 2020, is the test the argument needs to meet and never addresses. [Rejecting P2] Production growth measures output, not viability. A sector can expand output while destroying capital, and the counter documents precisely that: cumulative negative free cash flow of more than 200 billion dollars over the same years, funded by debt and asset sales. Rapid growth financed on those terms is evidence about the model's weakness rather than its strength. [Rejecting P3] The comparison is a claim about scale and does not bear on sustainability, and the two cases differ in the respect that matters: shale wells decline steeply within a few years and require continuous drilling merely to hold output flat, which conventional giant fields do not. The job-creation claim in the title also appears nowhere in the body, and employment in the sector has been volatile, falling sharply in each price downturn.