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Research & Commentary: Oil and Natural Gas Industries Responsible for 10.3 Million Jobs in 2015

August 11, 2017

Oil & Natural Gas Industry Responsible For 5.6 Percent of Total U.S. Employment In 2015

A report prepared by professional-services firm PricewaterhouseCoopers for the American Petroleum Institute—released in July 2017—shows the oil and natural gas industries were responsible for 10.3 million jobs across the country in 2015, amounting to 5.6 percent of total U.S. employment for that year. According to PricewaterhouseCoopers’ analysis, the number of jobs in the industries increased by 500,000 from 2011 to 2015.

“The oil and natural gas industry has a widespread economic impact throughout all sectors of the economy and across all 50 states and the District of Columbia,” the report states. “These impacts result directly from the employment and production within the oil and natural gas industry, indirectly through the industry’s purchases of intermediate and capital goods from a variety of other U.S. industries, by the personal purchases of employees and business owners both within the oil and natural gas industry and out of the additional income in the supply chain to the oil and natural gas industry, and from spending by shareholders out of the dividends received from oil and natural gas companies.”

“At the national level,” the report continues, “each direct job in the oil and natural gas industry supported an additional 2.7 jobs elsewhere in the U.S. economy in 2015. Counting direct, indirect, and induced impacts, the industry’s total impact on labor income (including proprietors’ income) was $714 billion, or 6.7 percent of national labor income in 2015. The industry’s total impact on U.S. GDP was $1.3 trillion, accounting for 7.6 percent of the national total in 2015.”

The 15 states with the largest number of jobs directly or indirectly tied to oil and natural gas were, in order, Texas, California, Oklahoma, Pennsylvania, Louisiana, Florida, Ohio, New York, Illinois, Colorado, Michigan, Georgia, New Jersey, North Carolina, and Kansas. Eighty-three percent of all the jobs attributable to the oil and natural gas industries in the United States were located in these 15 states. In Oklahoma, 16.6 of the state’s total employment and 28.1 of the state’s labor income—defined as “wages and salaries and benefits as well as proprietors’ income”—were linked to these two industries, the most of any state.

Technological advances in hydraulic fracturing, commonly called “fracking,” particularly in the horizontal drilling process, is responsible for a significant chunk of the employment increase. According to the U.S. Energy Information Administration (EIA), fracking now accounts for 51 percent of all crude oil production in the United States and has transformed the energy outlook of the country over the past decade.

EIA also estimates the continuing switch of electricity-generation fuels to fracking-produced natural gas is responsible for 63 percent of the drop in U.S. energy-related carbon-dioxide emissions over the past decade. The rise of hydraulically-fractured shale gas as a replacement for coal has been primarily responsible for the United States now enjoying its lowest level of carbon-dioxide emissions since 1989. 

The oil and natural gas hydraulic fracturing has enabled us to exploit are cost-effective and abundant, and they can ensure the United States is the world’s largest energy producer well beyond the 21st century. Policymakers should make sure not to put unnecessary and harmful regulatory burdens on industries such as the natural gas and oil industries, which are safe, responsible, and have had an enormous positive impact on the economy at the macro and micro levels.  

The following documents provide more information on hydraulic fracturing.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, provide $1,300–$1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

2016’s Most and Least Energy-Expensive States
https://wallethub.com/edu/energy-costs-by-state/4833/
This study by WalletHub compares the total monthly residential energy bills in each of the 50 states and the District of Columbia using a special formula that accounts for electricity, natural gas, motor fuel, and home heating oil.

What If … Hydraulic Fracturing Was Banned?
https://www.heartland.org/publications-resources/publications/what-if-hydraulic-fracturing-was-banned
This study is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

What If … America’s Energy Renaissance Never Happened?
https://www.heartland.org/publications-resources/publications/what-ifamericas-energy-renaissance-never-actually-happened
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have been created and $548 billion in annual GDP may have disappeared since 2009. Electricity prices would also be 31 percent higher and gasoline prices 43 percent higher.

Hydraulic Fracturing a Game-Changer for U.S. Energy and Economies
https://www.heartland.org/publications-resources/publications/hydraulic-fracturing-a-game-changer-for-us-energy-and-economies?source=policybot
In this Policy Study from The Heartland Institute, Heartland Research Fellow Isaac Orr explains the advantages and disadvantages of smart drilling and its alternatives. Orr reviews the background and potential of hydraulic fracturing in the United States and puts that potential in the context of the supply of and demand for oil and gas. He addresses the environmental impacts of hydraulic fracturing, both positive and negative, as well as the public safety issues raised by activists, such as potential harm to drinking water supplies. Orr also discusses how oil and gas production is regulated at the state and national levels and suggests appropriate policies for the industry.

Bill McKibben’s Terrifying Disregard for Fracking Facts
https://www.heartland.org/publications-resources/publications/bill-mckibbens-terrifying-disregard-for-fracking-facts?source=policybot
This Heartland Institute Policy Study, written by Research Fellow Isaac Orr, examines how methane emissions are measured, reports the effect those emissions may have on global warming, and discusses several falsehoods journalist Bill McKibben repeats from the discredited movie Gasland. It also evaluates the available fracking alternatives and discusses the relatively small impact new methane-emissions rules enacted by the Environmental Protection Agency will likely have on Earth’s climate.

Fracking Facts: The Science, Economics, and Legal Realities
https://www.heartland.org/publications-resources/publications/fracking-facts-the-science-economics-and-legal-realities
Hydraulic fracturing has been employed in the United States since the 1940s. Although innovation has improved the precision of the process, the essentials are the same. Utilizing horizontal drilling, a mixture of mostly water, sand, and trace amounts of chemicals, are used to create fissures in underground shale deposits to allow oil and natural gas trapped in hard rock to move toward the surface to be collected. Activists have blamed fracking and the processes associated with it for emissions of pollutants, earthquakes, and even groundwater contamination, though independent evidence consistently shows these allegations to be false. Leigh Thompson of the Texas Public Policy Foundation argues the evidence supporting fracking bans looks slim when attention is drawn to the facts.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at john@heartland.org or 312/377-4000.

Author
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
TBenson@heartland.org