Boomtowns and the Nimbleness of the Housing Market: The Impact of Shale Oil and Gas Drilling on Local Housing Markets
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Recent drilling innovations allowing access to unconventional resources like tight oil and shale gas have spurred a number of drilling booms around the United States. One side effect is rising housing prices caused by migrating oil and gas industry workers who create a positive housing demand shock. Initial research has examined the effect of these shale drilling booms on rental prices and home valuations, but thus far the effect of the price signal on housing supply has not been investigated. Using two-way fixed effects estimators I analyze the effect of shale drilling operations on population, home and hotel construction in the Marcellus, Bakken and Fayetteville Shale regions, finding that a housing boom accompanies the drilling boom. The size of the impact tends to increase as the considered region becomes more rural and remote.