A new study from the National Bureau of Economic Research underscores the economic benefits of shale drilling and strengthens the case against Governor Kasich’s proposed severance tax increase. Imposing such a high severance tax on shale gas drilling would curtail production in Ohio and reduce or eliminate the benefits for Ohio natural gas consumers.

The NBER working paper estimates that the shale gas boom provided natural gas consumers with $74 billion per year in economic benefits from 2007 to 2013. Researchers Catherine Hausman and Ryan Kellogg credit these benefits to technological improvements in shale drilling (often called “fracking”). Drillers leveraged this technological innovation to produce a much greater supply of natural gas, which drove prices down by 47% over those six years.

Interestingly, Hausman and Kellogg found that gas producers did not share in the same benefits that gas consumers enjoyed, because the detrimental impact of low prices outweighed the boost in production. Overall, producers were on the losing end to the tune of about $26 billion.

More relevant for Ohioans is the finding that the Midwest region was second only to the south central United States (like Texas and Oklahoma) in the share of consumer benefits. Midwestern natural gas consumers reaped a great share of shale rewards because of our region’s high levels of industrial activity and use of natural gas for electricity generation. The study also presents strong but ultimately inconclusive evidence that the shale gas boom helped to grow manufacturing and create blue-collar industrial jobs.

This independent analysis supports The Buckeye Institute’s position that Ohio policymakers should not support an increased severance tax on shale drilling. Because of the shale boom, families are saving money on their gas bills and manufacturers are putting Ohioans back to work. Meanwhile, gas producers are distressed by low prices. Imposing a heavy severance tax will force these struggling producers to cut back or leave, which ultimately hurts Ohio families and weakens state economic growth.