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New Study Details How Vital Domestic Oil and Gas Production is to the Economy

new report from PricewaterhouseCoopers (PwC) reports the oil and natural gas industries directly or indirectly supported over 11 million jobs across the country in 2019.

According to the report, commissioned by the American Petroleum Institute (API), those jobs produced $892 billion in labor income, and had a nationwide economic impact of nearly $1.7 trillion.

The PwC study is an update of a 2017 study that found the oil and natural gas industries supported more than 10.3 million jobs in 2015, producing more than $714 billion in labor income, and having $1.3 trillion in economic impact.

‘Foundation for … Growth and Prosperity’

Because oil and gas production and use is the lifeblood of America’s economic success, the country will be harmed if politicians restrict access to or the use of these critical resources, said Mike Sommers, president of API, in a statement about the report.

“As America’s economy comes back, the natural gas and oil industry will serve as the foundation for long-term growth and prosperity,” said Sommers. “Every state across the country – both blue states and red states – rely on American energy to fuel each sector of the economy and support millions of U.S. jobs.

“This study reinforces that America’s economic outlook is brighter when we are leading the world in energy production, and it serves as a reminder of what’s at stake if policymakers restrict access to affordable, reliable energy and make us more dependent on foreign sources,” Sommers said.

Growing Fossil Fuel Reliance

In the four years since the first study, the United States has only grown more reliant on oil and natural gas for robust economic growth, the study shows.

The 11.3 million jobs supported by oil and natural gas in 2019 represented 5.6 percent of total U.S. employment, while the $892 billion in labor income represented 6.8 percent of all U.S. labor income, and the $1.7 trillion of economic impact represented 7.9 percent of total U.S. gross domestic product.

Texas’ oil and gas industry led the nation in 2019 with more than 2.5 million jobs supported, producing $251 billion in labor income, and $411 billion in economic impact. California ranked second with in excess of 1.05 million jobs tied to the industry, producing $94 billion in labor income and $199 billion in economic impact.

Oklahoma had the highest percentage of oil-and-gas-supported jobs as a share of state employment in 2019 at 16.7 percent, followed by Wyoming (16.6 percent), North Dakota (14.9 percent), Texas (13.9 percent), and Louisiana (12.6 percent).

Big Share of State Incomes

The oil and gas industries’ total labor income impact as a share of state labor income in 2019 was highest in Wyoming at 25.6 percent, followed by Oklahoma (25.3 percent), Texas (21.8 percent), North Dakota (19.4 percent), and Louisiana (16.8 percent), says PwC’s report.

Oil and gas’ total share of state gross domestic product (GDP) in 2019 was highest in Alaska, at 35.7 percent. Oklahoma was second at 28.5 percent, followed by Wyoming (26.3 percent), North Dakota (23.5 percent), and Louisiana (23 percent).

Economic, Political Multiplier Effect

“At the national level, each direct job in the oil and natural gas industry supported an additional 3.5 jobs elsewhere in the US economy in 2019 (for a multiplier of 4.5),” the report states. “In 31 states the industry directly and indirectly supported at least 100,000 jobs in 2019….The share of employment supported by the oil and natural gas industry (including direct, indirect and induced impacts) in each state ranges from 2.6 percent in the District of Columbia to 16.7 percent in Oklahoma.

“[A]t the congressional district level, the number of jobs directly provided by the oil and natural gas industry was at least 1,000 in all but three districts and exceeded 5,000 in 132 congressional districts in 2019,” says PwC’s report. “Including direct, indirect, and induced effects, the industry supported more than 10,000 jobs in 424 congressional districts in 2019.”

‘Strengthens the U.S. Economy’

Lawmakers should take this report seriously, if they care about understanding the factors that sustain economic growth, says Cameron Sholty, director of Government Relations, with The Heartland Institute, which co-publishes Environment & Climate News.

“State lawmakers would do well to pay attention and take to heart this new study, which confirms what is already intuitively known: domestically produced and processed oil and natural gas strengthens the U.S. economy and is contributing to robust economic growth,” Sholty said. “In the wake of the pandemic, it’s important for policymakers to keep their eye on the ball and ensure workers and industries are empowered to control their own futures.”

The Biden administration is seems ignorant of the danger of relying on foreign countries for energy, says Isaac Orr, a policy fellow at the Center of the American Experiment.

“API’s study shows having a strong domestic energy industry is important for economic growth, helping to create thousands of American jobs and ensure lower energy costs by curbing the power of international oil cartels,” Orr said. “Unfortunately, under the Biden administration, American oil and gas producers are treated as a liability, rather than the major asset they are.

“The administration has sought to impede American oil and gas development while simultaneously asking OPEC nations to pump more oil,” said Orr. “It’s hypocritical and shameful that the administration can understand the importance of low-cost energy and then turn around and import it from potentially hostile nations, rather than promoting domestic production.”

Tim Benson (tbenson@heartland.org) is a policy analyst at The Heartland Institute.

Tim Benson
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.

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