U.S. Economic Recovery Hinges on Oil & Gas Industry: Study

July 27, 2021by Geoffrey Kerecha
(Image source: Washington Informer)

By: Stacy M. Brown

America’s natural gas and oil industry will need to serve as a vital driver of the nation’s post-pandemic economic recovery, according to a new study.

The industry counts as critical to every sector of the U.S. economy and supports millions of jobs across all 50 states, says a study by PricewaterhouseCoopers that compiles the latest available government data.

The 134-page study, which explores the economic impact of the oil and natural gas industry, found that the business supported 11.3 million jobs and contributed nearly $1.7 trillion to the U.S. economy in 2019.

The study authors reported that the 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 U.S. industries.
  • 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.

In addition to supporting well-paying jobs, the natural gas and oil industry, directly and indirectly, contributed an estimated $1.7 trillion to the U.S. economy in 2019, representing 7.9 percent of the U.S. gross domestic product.

Researchers found through wages, taxes, capital investments, and support to other industries, the economic impact extends beyond traditional natural gas and oil-producing states.

“Every state in the nation has a stake in continued access to U.S. natural gas and oil reserves, which are critical for the nation’s economic recovery,” the study authors wrote.

In short, as the nation continues to recover from the pandemic and the economic downturn that resulted, the natural gas and oil industry will serve as an engine for long-term growth.

“The industry continues to create good-paying jobs and deliver reliable American energy to enterprises, including health care, retail, manufacturing, education and more, in communities across the nation,” researchers concluded.

According to the findings, in 2019, the natural gas and oil sector directly and indirectly:

  • ​​Supported more than 11.3 million total jobs or 5.6 percent of total U.S. employment.
  • Generated an additional 3.5 jobs elsewhere in the U.S. economy for each direct job in the U.S. natural gas and oil industry.
  • Produced $892.7 billion in labor income, or 6.8 percent of the U.S. national labor income.
  • Supported nearly $1.7 trillion to U.S. gross domestic product, accounting for 7.9 percent of the national total.

The U.S. Energy Information Administration noted that global oil and liquid fuels consumption is expected to surpass 2019 levels in 2022, as economic activity and travel patterns normalize.

“This represents an opportunity for the U.S. to meet the world’s rising demand for affordable, reliable fuels with homegrown natural gas and oil,” American Petroleum Institute President and CEO Mike Sommers wrote in an email.

“That said, America’s economic outlook depends on federal and state policy proposals that incentivize resource development, modernize energy infrastructure and streamline burdensome regulations,” Sommers wrote. “The nation’s hard-fought energy security and GDP growth are at stake, even as the natural gas and oil industry continues to drive the nation’s post-pandemic recovery.

“As America’s economy comes back, the natural gas and oil industry will serve as the foundation for long-term growth and prosperity,” he said. “Every state across the country — both blue states and red states — rely on American energy to fuel each sector of the economy and support millions of U.S. jobs. This study reinforces that America’s economic outlook is brighter when we are leading the world in energy production, and it serves as a reminder of what’s at stake if policymakers restrict access to affordable, reliable energy and make us more dependent on foreign sources.”

Source: Washington Informer

Geoffrey Kerecha