Debates continue about ways to reduce the deficit, create jobs, and jump-start the U.S. economy. One important way to approach the issue is focusing on our nation’s strengths, and how we can build upon them. And one of our strengths is our world-class oil and natural gas industry.
A study released this month by PricewaterhouseCoopers shows that the U.S. oil and natural gas industry is a foundational part of the U.S. economy – throughout the ups and downs. The numbers show that even during the 2008 economic crisis and ensuing recession – when U.S. crude oil prices fell from a high of $145 a barrel to a low of $30 a barrel –the U.S. oil and gas industry remained a steady source of economic activity and job creation.
According to the study, in 2009 the operations and capital investments from the U.S. oil and natural gas industry:
- Supported 9.2 million American jobs – about 1 in every 20 jobs.
- Accounted for 7.7 percent of U.S. GDP, up from 7.5 percent in 2007.
- Had an economic impact that reached all 50 states and the District of Columbia.
The top 15 states in percentage of jobs supported by the industry were Wyoming, Louisiana, Texas, Oklahoma, Alaska, North Dakota, New Mexico, West Virginia, Delaware, Kansas, Montana, Mississippi, Colorado, Arkansas and Utah.
While some of these are known energy producing states, it’s also interesting to note large job numbers in other states. For example, the industry supported about 900,000 jobs in California, about 275,000 jobs in Pennsylvania and about 250,000 jobs in New York.
These 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.
Back in 2008, after commodities and other markets hit all-time highs, oil prices fell more than $100 per barrel as the economic crisis cut demand for energy. While other industries were seeing large drops in payrolls – and some companies were receiving government bailouts – the U.S. oil and gas industry continued to steadily support the economy and more than 9 million American jobs.
We were able to do that due to our focus on long-term investment and the support of stable policies based on market fundamentals, not short-term market volatility.
ExxonMobil and other oil and gas companies have learned from experience that commodity prices fluctuate – often unpredictably. And yet our energy projects cost billions and can take 10, 20, 30 years and more from start to finish. So we must operate and invest in a disciplined, safe, and cost-efficient way to help ensure that we can keep our projects moving forward, our business running, and the energy flowing for consumers in both up and down business cycles.
But we can’t do that alone. These efforts must be supported by sound and stable policy measures applied throughout the economy that maintain a level playing field, promote investment and support job growth.
The results of letting companies compete and invest can ripple throughout the economy. In our industry, studies have shown that opening up access to energy resources that have been kept off-limits could create 400,000 new jobs by the year 2025, or create as much as $1.7 trillion in government revenue over the life of the resources.
On the other hand, punitive measures – such as selectively raising taxes on the U.S. oil and gas industry — accomplish none of these things. It may sound politically expedient in times of high prices, but it would only serve to raise costs for businesses, curb economic growth and threaten the millions of American jobs our industry supports – not to mention our national energy security.