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New report breaks out O&G economic impacts McDowell Group’s fourth study for Alaska Oil and Gas Association adds economic impact of taxes, royalties, to company spending Kristen Nelson Petroleum News
The impact of spending by oil and gas companies in Alaska is considerable, combining wages and salaries to employees and monies spent with Alaska businesses.
When you add the impact of taxes and royalties and the jobs and spending they create from state and local governments, that impact more than doubles.
Jim Calvin, McDowell Group senior economist and principal, told an Alaska Oil and Gas Association luncheon May 29 that the total industry impact in the state - including direct, indirect and induced employment and wages - is 111,000 jobs and $6.45 billion in wages.
The study the McDowell Group just completed for AOGA, “The Role of the Oil and Gas Industry in Alaska’s Economy,” is the fourth such study McDowell has done, Calvin said, with the first done in 1999. The study is available on the AOGA website at www.aoga.org.
Employment, payroll The McDowell study for 2013 included 16 primary oil and gas production companies, pipelines and refineries: Alyeska Pipeline Service Co., Apache Corp., BP Exploration (Alaska) Inc., Chevron, ConocoPhillips Alaska Inc., eni petroleum, ExxonMobil Production Co., Flint Hills Resources Alaska, Hilcorp, Petro Star Inc., Pioneer Natural Resources Alaska Inc., Repsol E&P USA Inc., Shell Exploration and Production Co., Statoil, Tesoro Alaska Co. and XTO Energy Inc.
Those companies employed 5,335 workers in 2013, with 4,700 of those Alaska residents who earned $780 million in wages.
Direct, indirect and induced employment and wages from the industry totaled 51,000 jobs and $3.45 billion in wages in the state’s private sector, excluding nonresident oil and gas industry workers and their wages.
“Oil dollars move through the economy as spending on goods and services, payrolls to Alaskan employees, taxes paid to local governments, and taxes and royalties paid to state government,” the report said.
And when state and local spending of taxes and royalties paid by the industry are considered, the study found that added another 60,000 jobs and $3 billion in wages to the state’s economy.
When the impacts of primary company spending and payments to the public sector were combined, the study found that for each primary company job, 20 additional jobs were generated in the Alaska economy; for each dollar earned by primary company employees, $8 in additional wages were generated in the state; and the combination, 111,000 jobs out of 335,000 private sector wage and salary jobs in the state, was 33 percent of wage and salary employees in Alaska and 38 percent of wages, $6.45 billion out of $17.1 billion.
McDowell said the entire Alaska economy in 2012 - including self-employed and active-duty military personnel - totaled some 458,400 jobs.
Dollars into the economy In addition to wages and salaries, the primary companies reported some $7 billion in vendor and inter-company spending in Alaska in 2013. McDowell said when the inter-company spending was subtracted some $5 billion in operator and capital expenditures with Alaska vendors remained.
The study found that 52 percent of vendor expenditures were with companies classified as “oil and gas extraction,” “oil and gas wells” and “support activities for oil and gas operations.”
The remaining 48 percent was spent with firms providing professional and technical services (18 percent), services (8 percent), transportation (6 percent), retail/wholesale (6 percent), construction - other than those included oilfield support (4 percent), utilities (2 percent) and all others (4 percent).
More than 1,500 businesses in Alaska directly serve the primary companies, the study found, forming part of the indirect impact of the primary companies.
The impact of the primary companies also includes employees spending wages in the Alaska economy, with those jobs and wages termed induced economic impacts.
The combination of primary company direct, indirect and induced impact is the 51,000 jobs and $3.45 billion annual payroll, about 20 percent of private sector wage and salary jobs and 27 percent of private sector wages, McDowell said in the study.
Impact on state government From 1959 to fiscal year 2013, the report says, Alaska state oil revenues in 2013 dollars totaled $197 billion, 88 percent of all state revenues from natural resources. The $7.4 billion the state received in fiscal year 2013 was 47 percent of all state revenue and 92 percent of unrestricted general funds.
Oil and gas industry taxes and royalties used by state and local governments create thousands of jobs and millions of dollars in wages, in 2013 accounting for just over 60,000 jobs and $3 billion in annual wages across the state.
Regionally, Anchorage accounts for more than half of the jobs created in the state as a direct or indirect result of oil industry activity, some 31,000 direct, indirect and induced jobs, and $2.07 billion in wages. The Kenai Peninsula Borough is next with some 6,000 direct, indirect and induced jobs and $430 million in wages, followed by the Matanuska-Susitna Borough with employment of some 4,000 and wages of $310 million.
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