In a recent study, the oil and natural gas industry was measured to see what type of influence it had on the impact of the US economy in 2011 regarding employment, labor income, and value added. Value added refers to "the additional value created at a particular stage of production" as well as "a measure of the overall importance of an industry" as represented by its contribution to the nation's gross domestic product.
This preliminary report, which was prepared by PricewaterhouseCoopers LLP for the American Petroleum Institute, used the industry's 2011 employment and capital expenditures figures and applied economic multipliers for 2010 from the latest IMPLAN modeling system.
According to the report, which was released in December 2012, PWC described three specific impact categories. Direct impact focused in terms of the jobs, labor income, and value added within the oil and natural gas industry. The indirect impact is in relation to the jobs, labor income, and value added throughout the supply chain of the industry. Lastly, the induced impact is measured in those same terms but resulting from household spending of labor and proprietor's income directly or indirectly from the oil and gas industry spending.
This analysis also measured the industry's operational impact—buying of goods and services not for final consumption, and capital investment impact—investment in new structures and equipment, to the national economy. These impacts signify the "backward linkages" to the industry suppliers and not to other sectors that use oil and natural gas as an input.
Employment
Based on the data provided by the report, PWC states for 2011, nearly 2.6 million jobs directly impact the oil and natural gas industry. Gasoline retail outlets' employment—the largest of the industry—contributes more than 879,000 jobs. The oil and natural gas extraction group is second-largest with almost 784,000 US workers. Rounding out the top 5 in terms of number of jobs are the support activities for oil and gas operations, private natural gas distribution, and oil and gas pipeline construction and related structures with an aggregate of 499,000 employees.
With the oil and natural gas industry's purchases of intermediate inputs from outside suppliers, it will contribute 5.8 million indirect and induced jobs in other industries. The capital investment impact supports 1.2 million indirect and induced jobs in the US. In aggregate, the oil and natural gas industry employees account for 9.6 million jobs to the US, or 5.5% of total employment in the US.
Labor income, value added
The oil and natural gas industry directly contributed more than $224 billion in labor income with a value added figure of $481 billion to GDP. Oil and natural gas extraction led the group with over $88 billion in labor income and value added of $160 billion. Retail outlets were second with labor income at $26.7 billion and value added to GDP with $45 billion. The refineries group value added figure was $83 billion over their labor income of $24 billion, which was the largest increase in value added of the subsector groups.
Labor income, including proprietors' income, for indirect and induced impacts, contributed $356 billion with a value added to GDP of nearly $621 billion.
Based on the findings of this report, the total impact for labor income was $581 billion for the oil and natural gas industry, which is 6.1% of the entire US labor income. The 2011 industry value added figure contributed 7.3% to the US GDP, or $1.1 trillion.
Based on findings from a previous report that PWC compiled, they found that from 2009 to 2011, the oil and natural gas industry directly added over 300,000 jobs, while holding steady in the indirect and induced impact groups. Comparing labor income from 2009 to 2011, the total impact for value added from the oil and natural gas industry was unchanged at $1.1 trillion.
