This report was prepared by the American Petroleum Institute (API) in 2020 and explores the economic impact of the oil and natural gas industry in the United States. These impacts are the result of three channels: direct impacts from the employment and production within the oil and natural gas industry; indirect impacts through the industry’s purchases of intermediate and capital goods from a variety of other US industries; and induced impacts from the personal purchases of employees and business owners both within the oil and natural gas industry and its supply chain, as well as from the personal spending by shareholders out of the dividends received from oil and natural gas companies.
The American Petroleum Institute engaged PricewaterhouseCoopers LLP to quantify the economic impacts of the US oil and natural gas industry in terms of employment, labor income, and value added at the national, state, and Congressional District level.2 In addition, the economic impacts of the onshore upstream subsector of the industry in 14 states are also quantified. This report provides PwC’s economic impact estimates for 2019.
The report’s findings show that the US oil and natural gas industry has a widespread economic impact throughout all sectors of the economy. Combining the industry’s operational impact (due to purchases of intermediate inputs and payments of employee compensation and dividends) and its capital investment impact (due to its investment in new structures and equipment), the industry’s total impact amounted to 11.3 million full-time and part-time jobs and accounted for 5.6 percent of total US employment in 2019.
At the national level, each direct job in the oil and natural gas industry supported an additional 3.5 jobs elsewhere in the US economy in 2019 (for a multiplier of 4.5). Counting direct, indirect, and induced impacts, the industry’s total impact on labor income (including proprietors’ income) was $892.7 billion, or 6.8 percent of the US national labor income in 2019. The industry’s total impact on US GDP was nearly $1.7 trillion, accounting for 7.9 percent of the national total in 2019.
The economic impact of the oil and natural gas industry can be seen across the United States. In 31 states the industry directly and indirectly supported at least 100,000 jobs in 2019. Texas alone had 2.5 million jobs supported by the industry, and California had over 1 million jobs attributable to the industry. The share of employment supported by the oil and natural gas industry (including direct, indirect and induced impacts) in each state ranges from 2.6 percent in the District of Columbia to 16.7 percent in Oklahoma.
At the congressional district level, the number of jobs directly provided by the oil and natural gas industry was at least 1,000 in all but three districts and exceeded 5,000 in 132 congressional districts in 2019. Including direct, indirect, and induced effects, the industry supported more than 10,000 jobs in 424 congressional districts in 2019.
The onshore upstream subsector of the oil and natural gas industry directly provided 690,500 jobs, paid out $126.2 billion in labor income, and generated $221.6 billion in value added in 2019 in the 14 states studied. Including direct, indirect, and induced impacts, the total impacts of this subsector on the 14 states were 3.2 million jobs, $297.2 billion in labor income, and $493.1 billion in value added.
[Note: No mention of impacts of climate change on U.S. economy that the oil and gas industry are causing directly and indirectly in the U.S. Classic Catch-22]
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