ExxonMobil is scheduled to report third-quarter earnings tomorrow, and earnings day usually attracts quite a bit of media attention and political comment. While the debate often centers on the numbers that show the size and profitability of the oil and gas industry, I’ve found there’s far less focus on what such numbers mean for the U.S. economy as a whole.
The earnings, investment and employment generated by oil and natural gas companies create a ripple effect across the economy. So when ExxonMobil spends billions of dollars on energy projects, we’re not just keeping our more than 81,000 employees working – we’re creating demand for supplies, raw materials, contractors, equipment and more that helps keep other companies in business and helps create jobs.
In the first half of this year, for example, ExxonMobil spent $112 billion globally to keep our operations and offices running, to develop energy projects, to pay our taxes and to provide a return for our shareholders. We spent more than five times what we made over the period, to the benefit of millions of people and businesses.
But instead of looking at energy production and investment as an integral component of U.S. economic recovery, some critics have continued to put forward policy proposals that would limit our industry’s ability to invest and employ. They’ve called for tax increases, as well as continued government restrictions on access to U.S. energy supplies.
This approach might generate publicity, but it won’t create new private sector jobs that are critically important to our economic recovery. Instead, let’s look at a few examples of what can happen when just one industry in the private sector – the energy industry – is allowed to invest in the United States, according to recent studies.
- With the right development policies, the U.S. oil and natural gas industry could create 1 million new jobs over the next seven years – and 1.4 million jobs by 2030.
- The Barnett Shale in Texas is responsible for more than 100,000 jobs in the North Texas region alone.
- In the Marcellus Shale region in Pennsylvania, there were 72,000 new hires in core and ancillary jobs related to natural gas activities from the fourth quarter of 2009 to the first quarter of 2011.
- If New York were to ease its de facto moratorium on Marcellus Shale gas development, 15,000 to 18,000 new jobs could be created in the Southern Tier and Western New York – regions that lost a combined 48,000 payroll jobs between 2000 and 2010.
- In 2009, the oil and natural gas industry was responsible for more than $1 trillion of value added to the national economy, or 7.7 percent of the U.S. gross domestic product.
- From 2001 to 2011, the cumulative regional economic benefits from the Barnett Shale included $65 billion in economic output. Its annual economic output is $11.1 billion.
- Marcellus Shale producers spent $4.5 billion in 2009 alone, which resulted in $7.2 billion in direct, indirect and induced valued added to the economy.
- In West Virginia, another Marcellus Shale state, the economic activities of the natural gas industry generated more than $12 billion in economic output while creating more than 24,000 jobs.
- In North Dakota, home of the Bakken Shale, the oil and gas industry tripled its overall economic impact to the state in recent years – from $4.2 billion in 2005 to $12.7 billion in 2009. Not surprisingly, North Dakota has been reported to have a $1 billion budget surplus, and the state legislature passed a bill to reduce individual income tax rates.
- Pro-energy development policies could generate more than $800 billion in new government revenue by 2030.
- Activity in the Barnett Shale is estimated to generate $1.6 billion in tax revenue for the state of Texas in 2011.
- The spending planned by Marcellus producers in 2011 could generate nearly $1 billion in state and local tax revenues in Pennsylvania. They generated nearly $390 million in state and local tax revenue in 2009.
- In North Dakota, the oil and gas industry paid more than $800 million in state and local taxes in 2009.
More access to U.S. energy supplies can help progress the fundamentals of U.S. economic recovery – more jobs, more investment and more government revenue. So why don’t these numbers get tossed around in the political arena as often as the earnings numbers do?