Leena Koottungal
Survey Editor/News Writer
The US oil and natural gas industry supports 2 million jobs in Texas and 24% of the Lone Star State's economy, according to a study commissioned by the American Petroleum Institute as conducted by PricewaterhouseCoopers LLP.
API's report updates data from a previous report and shows that, between 2007 and 2009, the economic activity supported by the industry nationwide actually increased in size as a percentage of US gross domestic product (GDP), from 7.5-7.7%. The industry supports 9.2 million jobs in the US.
In describing these economic impacts, this report considers three separate channels—the direct impact, the indirect impact, and the induced impact—that in aggregate provide a measure of the total economic impact of the industry.
The direct impact is measured in terms of the jobs, labor income, and value added within the industry. The indirect impact is measured in terms of the jobs, labor income, and value added occurring throughout the supply chain of the industry. The induced impact is measured in terms of the jobs, labor income, and value added resulting from household spending of income earned either directly or indirectly from the industry's spending.
This report quantifies the industry's operational impact (due to its purchases of intermediate inputs) and capital investment impact (due to its investment in new structures and equipment) at the national level.
Direct impacts
In 2009, the oil and gas industry directly provided 2.2 million jobs for American workers with about $176 billion in wages and salaries and fringe benefits and proprietors' income. The industry directly generated $465 billion in GDP.
The 10 states with the largest combined direct employment effect generated by the oil and gas industry were, in order: Texas, California, Louisiana, Oklahoma, Pennsylvania, Ohio, Florida, Illinois, New York, and Colorado. These top ten states accounted for 56.6% of the oil and gas industry's national direct employment, 72.1% of industry's national direct labor income, and 73.6% of industry's national direct value added in 2009.
Indirect, induced impacts
Based on data from the US Census Bureau and Department of Commerce, PWC estimates that the oil and gas industry invested $132 billion in new equipment and structures in 2009.
PWC quantified the indirect and induced impacts of both the oil and gas industry's operational and capital spending using the customized impact models PWC has built based on the IMPLAN modeling system. The IMPLAN database represents a consistent set of economic data processed from various published sources such as the Bureau of Economic Analysis's National Income and Product Accounts and Regional Economic Information System.
PWC estimates that at the national level, each direct job in the oil and gas industry supported more than three jobs elsewhere in the US economy in 2009. In addition to the 2.2 million direct jobs in the oil and gas industry, the industry's purchase of intermediate inputs from other US suppliers are estimated to support 5.8 million indirect and induced jobs in other industries across the country in 2009, while its capital investment is estimated to support an additional 1.2 million indirect and induced jobs across many sectors of the US economy.
Combined, the oil and gas industry directly or indirectly generated 9.2 million jobs in the US economy in 2009. The service sector accounts for the largest number of indirect and induced jobs attributable to the oil and gas industry's spending in 2009, followed by wholesale and retail trade, finance, insurance, real estate, rental and leasing, and manufacturing.
The industry's estimated national indirect and induced labor income (including wages and salaries and benefits as well as proprietors' income) was $357 billion and the indirect and induced value added was $617 billion in 2009.
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