Local energy access and industry specialization: Evidence from World War II emergency pipelines

Abstract

How does improving access to the supply of energy affect regional specialization in manufacturing? We evaluate the long-run employment impacts of pipelines constructed by the U.S. government during World War II to transport oil and gas from the oil fields of the Southwest to wartime industrial producers in the Northeast. The pipelines were built rapidly to connect end points along a direct path that minimized use of scarce construction materials. Postwar they were converted to supply en route customers, giving counties close to the pipelines access to a cheap and plentiful source of energy. Between 1940 and 1950, counties with better access to pipeline gas had larger increases in their share of employment in energy-intensive industries. These impacts persisted to the mid-1980s for all energy-intensive industries and to the late 1990s for the subset of industries intensive in the direct use of electricity, despite the disruptive effects of the 1970s energy crisis. Our findings are relevant for understanding energy-related path dependence in local economic development patterns and how government intervention in energy markets affects industry location in the short and long run.