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Report shows impact of oil industry PwC analysis quantifies the importance of the industry to Alaska and the United States in terms of dollar value and employment in 2019 Alan Bailey for Petroleum News
A recent report by PricewaterhouseCoopers for the American Petroleum Institute illustrates just how important the oil and gas industry is to the economy of Alaska and to the economy of the United States as a whole. The industry brings significant value both in dollar terms and in terms of providing gainful employment for people.
PwC conducted its analysis by assessing direct, indirect and induced impacts of the industry. Direct impacts consist of jobs, labor income and value added within the oil and gas industry itself. Indirect impacts consist of the same parameters throughout the industry’s supply chain, as a consequence of operating and capital expenditures. And induced impacts result from the household spending of earnings by labor, proprietors and shareholders from the industry.
The value added, broadly equivalent to the industry’s contribution to the gross domestic product, consists of the total output associated with the industry less the value of the industry’s intermediate inputs.
A major impact The report shows that in the U.S. in 2019 the industry, including its indirect and induced impacts, supported 11.3 million full-time and part-time jobs, amounting to 5.6% of total employment. The total value added to the economy amounted to about $1,687 billion, or 7.9% of the U.S. GDP. In Alaska the industry created more than $4.5 billion in wages, with 15,780 direct jobs in the industry and more than 31,000 indirect jobs in other sectors of the economy. Particularly important in Alaska was the industry’s value-added impact, with $19.4 billion in total economic impact amounting to 35.7% of the state’s GDP.
In Alaska 9,300 direct jobs and 28,600 total jobs were attributable to the upstream, onshore sector of the industry.
The analysis does not consider what are referred to as “forward linkages,” the impact of the industry on economic sectors that use oil and gas.
Wide range of employment impacts In 2019 the share of total employment attributable to the oil and gas industry in individual states ranged from 2.6% in the District of Columbia to 16.7% in Oklahoma, with Alaska, at 10.3%, coming in sixth in that particular table. In terms of total employment, Texas and California were dominant, with Texas having 2.5 million jobs and California more that 1 million jobs supported by the oil industry. Alaska’s total of around 47,000 jobs was much lower, albeit in a state with a very much smaller population.
Texas and California also dominated the table of total value added by state by the oil and gas industry: the value added for Texas was $411 billion, while the value added for California was $199 billion. Those compare with the figure of $19.4 billion for Alaska.
Support for service industries In the U.S. as a whole in 2019, the indirect and induced impacts of the oil and gas industry on employment were particularly notable in the services industries, with these industries accounting for 54.8% of the total impact. Employment impacts were also notable on the wholesale and trade industry, at 10.1%, and on the finance, insurance, real estate, rental and leasing industry, at 14.2%.
In total in 2019, direct labor income from the oil and gas industry in the U.S. amounted to around $318 billion, with the industry’s total capital expenditures estimated at $232 billion.
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