The Economic Impacts of the Oil and Natural Gas Industry
THE ECONOMIC IMPACTS OF THE OIL AND NATURALGAS INDUSTRY ON THE U.S. ECONOMY IN 2009:EMPLOYMENT, LABOR INCOME, AND VALUE ADDED
The oil and natural gas industry is the primary energy source for transportation and theproduction of other goods and services. The oil and natural gas industry currently supplies more than 60% of the nation's total energy demands and more than 99% of thefuel used by Americans in their cars and trucks.
The American Petroleum Institute engaged PwC to quantify the direct, indirect, andinduced impacts of the U.S. oil and natural gas industry on the U.S. national and stateeconomies in terms of employment, labor income, and value added.
This report setsforth our estimates of the oil and gas industry's economic impacts in
, the mostrecent year for which a consistent set of national and state-level data is available.
The report's findings show that the oil and natural gas industry has a widespreadeconomic impact throughout all sectors of the economy and across all 50 states and theDistrict of Columbia. These impacts result directly from the employment and productionactivities occurring within the oil and gas industry, indirectly through the industry'spurchases of intermediate inputs and capital goods from a variety of other U.S.industries, and by the personal purchases of employees and business owners both withinthe oil and natural gas industry and out of the additional income in the supply chain tothe industry.In describing these economic impacts, this report considers three separate channels --the direct impact, the indirect impact, and the induced impact -- that in aggregateprovide a measure of the total economic impact of the oil and natural gas industry. The
is measured in terms of the jobs, labor income, and value added
the oil and natural gas industry. The
is measured in terms of the jobs,labor income, and value added occurring
throughout the supply chain
of the oil andnatural gas industry. The
is measured in terms of the jobs, laborincome, and value added resulting from
of income earned eitherdirectly or indirectly from the oil and natural gas industry's spending.This report quantifies the industry's
(due to its purchases of intermediate inputs) and
capital investment impact
(due to its investment in new structures and equipment) at the national level. It further breaks out the industry's
http://www.api.org/aboutoilgas/ and http://www.energy.gov/energysources/oil.htm
Value added refers to the additional value created at a particular stage of production. It is ameasure of the overall importance of an industry and represents the industry's portion of U.S.gross domestic product ("GDP"). Value added consists of: employee compensation, proprietors'income, income to capital owners from property, and indirect business taxes (i.e., those borne by consumers rather than producers).
PwC prepared a prior study for the American Petroleum Institute that quantified the economicimpacts of the oil and gas industry in 2007. See PwC,
The Economic Impacts of the Oil and National Gas Industry on the U.S. Economy: Employment, Labor Income, and Value Added
(September 8, 2009). Appendix B of this study provides a brief comparison of results betweenthe reported economic impacts in 2009 and 2007.