PWC: Oil, gas industry major contributor to US economy

The oil and natural gas industry supports more than 9 million US jobs while contributing to the national economy as both an employer and purchaser of US goods and services, according to a new study by PricewaterhouseCoopers (PWC) for the American Petroleum Institute.

Sam Fletcher
OGJ Senior Writer

HOUSTON, Sept. 9 -- The oil and natural gas industry supports more than 9 million US jobs while contributing to the national economy as both an employer and purchaser of US goods and services, according to a new study by PricewaterhouseCoopers (PWC) for the American Petroleum Institute.

The report said the oil and gas industry currently supplies more than 60% of the nation's total energy demands and more than 99% of the fuel used by US motorists in their cars and trucks, while 900 of the next 1,000 US electric power plants are projected to use natural gas.

The industry is one of the largest employers in the country, with millions of people in exploring, producing, processing, transporting, and marketing oil and natural gas. “Millions of jobs in other industries are supported by the oil and natural gas industry’s purchases of intermediate inputs and capital goods from other US producers,” the report said. “These businesses include equipment suppliers, construction services, management services, food services, and many other types of support services. These supporting businesses, in turn, purchase goods and services, spurring additional economic activities. Further, employees and business owners make personal purchases out of the additional income that is generated by this process, sending more new demands rippling through the economy.”

At the national level, the study found each job in the oil and gas industry supported more than three jobs elsewhere in the US economy in 2007, the most recent year for which data are available. In terms of operational impact, it directly and indirectly contributed over 7.8 million full-time and part-time jobs to the national economy.

Further, the industry's capital investment contributed an additional 1.4 million jobs to the national economy. Combining both operational and capital investment impacts, the oil and natural gas industry's total employment contribution to the national economy amounted to 9.2 million full-time and part-time jobs in 2007, accounting for 5.2% of total US employment.

Associated labor income, including proprietors' income, was estimated at $558 billion, or 6.3% of total national labor income. The industry's total value-added contribution to the national economy topped $1 trillion, accounting for 7.5% of US gross domestic product for 2007.

“The economic impact of the oil and natural gas industry reaches all 50 states and the District of Columbia,” PWC reported. The total number of jobs directly or indirectly attributable to the industry's operations ranged from a low of 12,815 (in the District of Columbia) to more than 1.7 million (in Texas). The top 15 states, in terms of the total number of jobs directly or indirectly attributable to the oil and natural gas industry's operations in 2007 were Texas, California, Oklahoma, Louisiana, New York, Pennsylvania, Florida, Illinois, Ohio, Colorado, Michigan, Georgia, North Carolina, Virginia and New Jersey.”

PWC said the industry accounted for 4% or more of total employment in another group of 15 states, including Wyoming (18.8%), Oklahoma (16.3%), Louisiana (13.4%), Texas (13.1%), Alaska (9.8%), New Mexico (8.1%), West Virginia (6.7%), Kansas (6.5%), Colorado (6%), North Dakota (5.7%), Mississippi (5.5%), Montana (5.3%), Utah (4.7%), Arkansas (4.4%), and Nebraska (4%).

This week as Congress debates greater domestic oil and gas access and higher energy taxes, legislators should keep in mind the oil and gas industry’s importance to the US economy and in states well beyond traditional oil and gas-producing regions, said API President Jack Gerard. “Congress should remember that some of the energy tax and climate change legislation it has proposed would have a devastating impact on the industry and many of the 9.2 million American jobs it supports, as well as on the American economy and energy security,” he said.

“The people in the US oil and natural gas industry are the backbone of our economy,” Gerard said. “They provide most of the nation’s energy, spurring growth and job creation across America. At a time of economic recession, the oil and natural gas industry is actually responsible for creating more jobs and generating more revenue to the economy. Irresponsible proposals to pile new taxes on the industry threaten these jobs and the nation’s ability to produce more of its own energy. We should not put any jobs at risk, but especially not when millions of Americans already are unemployed and economic recovery remains uncertain.”

Contact Sam Fletcher at samf@ogjonline.com.

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