How Much Is Oil Supporting U.S. Employment Gains?
The American Petroleum Institute said last week the U.S. oil and natural gas sector was an engine driving job growth. Eight percent of the U.S. economy is supported by the energy sector, the industry’s lobbying group said, up from the 7.7 percent recorded the last time the API examined the issue. The employment assessment came as the Energy Department said oil and gas production continued to make gains across the board. With the right energy policies in place, API said the economy could grow even more. But with oil and gas production already at record levels, the narrative over the jobs prospects may be failing on its own accord.
API commissioned a report from PricewaterhouseCoopers, which said the U.S. oil and gas industry supported more than 9 million jobs in 2011, a 6.5 percent increase from the last assessment in 2009. In a state like Texas, which hosts a significant portion of the U.S. onshore oil reserves, API said the industry supported 2 million jobs and made up 33 percent of the state’s economy.
“We need Congress and the administration to unlock additional opportunities by expanding access to domestic energy resources [and] speeding up permitting,” API President Jack Gerard said. “By doing so, we will create even more American jobs, grow our economy, protect consumers and take full advantage of our nation’s vast energy resources.”
The White House said on Friday that the latest report from the Bureau of Labor Statistics shows the U.S. economy is recovering from the worst economic downturn since the Great Depression. BLS said the unemployment rate for July was 7.4 percent, its lowest level since December 2008. The White House echoed API’s assessment on the employment outlook, saying it’s “critical” for policymakers to remain focused on things that speed up job creation. While API points to industry-specific numbers from two years ago, the White House said Friday most of the current employment gains were in the retail trade sector, not energy.
API’s assessment from Texas, however, is on par with the latest report on oil and natural gas production from the U.S. Energy Department. The Energy Department said Texas had the largest increase in proved reserves of crude oil in 2011 with about 1.8 billion barrels. Across the board, U.S. proved oil reserves increased to 29 billion barrels, the highest volume of proved reserves reported by the Energy Department since 1985.
Gerard said new drilling technologies have been “game-changing innovations” for the U.S. economy. The API’s report said each of the direct jobs in the oil and natural gas industry translated to 2.8 jobs in other sectors of the U.S. economy. That in turn translates to a total impact on U.S. gross domestic product of $1.2 trillion, the study found. Though jobs increased in July, it was at a lower rate than expected. The 162,000 increase in jobs was the smallest since April and workers were spending fewer hours on the job and getting paid less than they were last year. The argument from the energy industry on jobs says one of two things; either the administration really is standing in the way of the true potential from the energy sector or the actual job creation from oil and natural gas is temporary at best.
Originally written for OilPrice.com, a website that focuses on news and analysis on topics of alternative energy, geopolitics, and oil and gas. OilPrice.com is written for an educated audience that includes investors, fund managers, resource bankers, traders, and energy market professionals around the world.