"The U.S. Energy Boom Will Create
Millions of New Jobs."

Overstated. The U.S. oil and gas boom has come at an auspicious time. With record numbers of Americans out of work, hydrocarbon production is helping create much-needed jobs in communities from Pennsylvania to North Dakota. Shale gas production alone accounted for an estimated 600,000 U.S. jobs as of 2010, according to the consultancy IHS CERA.

It's much harder, though, to extrapolate into the future. In a deeply depressed economy, new development can put people to work without reducing employment elsewhere. That's why boom states have benefited massively in recent years. The same is not true, though, in a more normal economy. Unemployment rates are typically determined by fundamental factors such as the ease of hiring and firing and the match between skills that employers need and that workers have. The oil and gas boom won't change these much.

That's why we should be skeptical about rosy projections of millions of new jobs. Wood MacKenzie, for example, claims that the energy boom could deliver as many as 1.1 million jobs by 2020, while Citigroup forecasts a whopping 3.6 million. Unless the U.S. economy remains deep in the doldrums for another decade, these will mostly come at the expense of jobs elsewhere.

That hardly means all the new oil and gas coming online is worthless. In the near term, it can support hundreds of thousands of workers who would otherwise be unemployed. In the long term, it should deliver a boost to the overall U.S. economy, raising GDP by as much as three percentage points, according to my colleague, Citigroup's Daniel Ahn. But we can't drill our way out of America's job crisis. The numbers just don't add up.

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