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API: U.S. Energy Industry Creates Jobs, Wages Nationwide

As the oil and natural gas industry continues to lobby to keep its drilling subsidies, the American Petroleum Institute (API) has released a new study to show how the industry's nationwide workforce positively impacts the United States by creating jobs and wages.

Consultant PwC prepared the economic impact study, which reviewed employment, labor income and value added to national and state economies for 2009, the most recent year for which a "consistent set" of national and state-level data is available.

"The report's findings show that 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 authors stated.

"These impacts result directly from the employment and production activities occurring within the oil and gas industry, indirectly through the industry's purchases of intermediate inputs and capital goods from a variety of other U.S. industries, and 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 industry."

The report considered three separate channels -- direct, indirect and induced -- which in aggregate provided a measure of the total economic impact of the industry.

The direct impact measured jobs, labor income and value added within the industry. Indirect measured jobs, labor income and value added across the supply chain of the industry. And induced measured household spending earned from the industry's spending.

According to the report, the U.S. energy industry in 2009 employed 9.2 million in full-time and part-time jobs -- about one in 20 jobs -- which accounted for roughly 5.3% of total U.S. employment. At the national level, each direct job supported more than three jobs elsewhere in the U.S. economy in 2009, the report found.

Associated labor income, which includes industry income, in 2009 was estimated to be $534 billion, or 6%, of national labor income. The industry's total U.S. value-added was $1.1 trillion, accounting for 7.7% of U.S. gross domestic product.

The top 15 states, in terms of the total number of jobs directly or indirectly attributed to industry operations in 2009, were Texas, California, Louisiana, Oklahoma, Pennsylvania, Illinois, New York, Ohio, Florida, Michigan, Colorado, New Jersey, North Carolina, Indiana and Georgia.

"Combined these states account for over 70% of the total jobs attributable to the U.S. oil and natural gas industry's operations," the study said.

Texas provided an estimated 1.98 million jobs, or 14.3% of the state workforce, which in turn created an estimated $134.9 billion in labor income, or around 19% of the total labor income for the state.

California, in second place with an estimated 908,801 jobs, or 4.6%, of the state's employment in 2009, created about $62 billion in labor income, or 5.4% of the state total.

ExxonMobil Corp.'s Ken Cohen, vice president of public and government affairs, said Monday the study indicates that oil and gas jobs "are associated with every step of the demanding process of getting oil and natural gas to consumers safely and reliably, as well as the service providers and industries that depend on those activities for their business.

"Beyond just showing the industry's enormous economic contributions, I think this study is an important reminder of the cyclical nature of the industry -- and why targeting companies with punitive measures during periods of global high prices doesn't make for good policy."

In late April ExxonMobil launched a media blitz to coincide with its 1Q2011 earnings report, which accused the White House and members of Congress of playing politics in their zeal to repeal annual tax incentives for the oil and gas industry (see Daily GPI, May 2).

Cohen, who hosted a conference call with the media, said at the time "big numbers make headlines," but "what may not make the headlines is the context surrounding that number." The super major, he said, operates in more than 100 countries around the world, and in the first three months of 2011 "more than three-quarters of our operating earnings came from outside the United States."

The 90-page report is available from API.

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