API’s State of American Energy Report Touts Economic Impact of Oil and Gas Development

By Andrew Shaw

The American Petroleum Institute (“API”) released today its 2013 State of American Energy Report. Consistent with recent analyses, API’s report takes a bullish perspective on the prospects for U.S. energy security over the coming decade due to increased domestic oil and gas production.

In addition, API’s report touts the economic benefits of increased domestic oil and gas production. The report cites a Bank of America Merrill Lynch study, which found that lower natural gas prices saved U.S. companies and consumers an average of $566 million daily between July 2011 and June 2012. With respect to job creation, API emphasizes the chemical industry as a growth sector due to increased oil and gas production. Specifically, API references American Chemistry Council data, which shows that increased supply of ethane – a derivative of shale gas – could result in domestic chemical companies creating more than 400,000 domestic jobs. And as Congress and the Administration continue to search for ways to responsibly reduce the federal deficit, API’s report notes that oil and gas production results in significant federal revenue in the form of taxes, royalties, rents, and lease payments. According to API’s report, domestic oil and gas companies “pay on average more than $86 million every single day to the federal government.”   

This report comes as last week jobs’ report, released by the Bureau of Labor Statistics, showed that the oil and gas industry added 1,500 jobs in December. In total, the jobs’ report found that the oil and gas industry employs nearly 200,000 individuals, which is 6% higher than the total amount employed in December 2011.

Certainly, the oil and gas industry faces a number of policy changes, including, but not limited to: potential changes to tax expenditures for oil and gas development; debate over whether to expand liquefied natural gas exports; and concerns about the environmental impacts of new development. That said, it is clear that domestic oil and gas development is playing a significant role in job creation and economic growth. Moreover, the state of American energy is promising, which is a significant departure from where the country stood just several years ago.