API's Gerard responds to Markey's job estimate questions

American Petroleum Institute Pres. Jack N. Gerard disputed US Rep. Edward J. Markey’s (D-Mass.) allegations that API’s job growth estimates from more oil and gas activity are overblown. “It’s clear from us when we look at this letter that some folks don’t understand our industry’s job creation potential, or it’s a clever disguise to limit oil and gas production,” Gerard said during a Nov. 30 teleconference.

“You don’t need to look at the economics and the multiplier effects to know that we are creating thousands of jobs. It’s obvious in North Dakota and Pennsylvania,” he continued.

As for Markey’s claims in a Nov. 21 letter to Gerard that the US Bureau of Labor Statistics predicts that oil and gas extraction employment is expected to decline by 16% by 2018, Gerard said, “No one has backed up these unfounded claims based on the very limited [BLS] figures that Rep. Markey has cited.”

Independent research by Wood Mackenzie, which API released at its Jobs Summit on Capitol Hill soon after Labor Day, shows that more aggressive US energy development policies from Congress and the Obama administration would create 1.4 million new US jobs and $800 billion of new government revenue by 2030 through increased investments, he told reporters.

Markey, who is the US House Natural Resources Committee’s ranking minority member, said in his letter that subsequent press reports indicated many of those jobs would have little or nothing to do with oil and gas, and that the study’s single biggest category of petroleum employment are gasoline retail outlet cashiers typically earning less than $9/hr.

“The average wage in Pennsylvania due to the Marcellus shale is about 50% higher than in any other jobs in the state,” Gerard observed. “For anyone to dismiss this needs to go back to the millions of unemployed Americans and say they’re not willing to create jobs for them.”

He said the study’s job creation numbers actually are conservative. “[WoodMac] assumed a multiplier of 3.5 (2.5 indirect and induced jobs for every direct job created), compared to the far more aggressive multipliers for the oil and natural gas industry from the 2008 IMPLAN Database of 4.4 to 6.9, which are based on the Bureau of Economic Analysis’s input/output industry tables,” Gerard said.

“Congressman Markey and other critics now appear to be calling into question the very use of multipliers to project job impacts,” he added. “In fact, most recent estimates of jobs impacts, including estimates of the administration’s recent jobs proposal, include direct, indirect, and induced effects in their calculations. The critical point is that indirect and induced jobs created by the oil and gas sector are real jobs that will employ real Americans.”

Gerard sent Markey a more detailed response in a Nov. 30 letter. He also said that he planned to invite the federal lawmaker to API’s next State of the American Energy luncheon in early January.

Contact Nick Snow at nicks@pennwell.com.

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