There are many tough challenges facing our nation. America’s oil and natural gas industry could play a large role in solving many of them if we committed to more domestic energy production. Home-grown American energy could raise investment in the United States’ economy by hundreds of billions of dollars, create vast numbers of jobs, generate billions of dollars to the government, and increase our global security.
Arguably no industry sector is more integrated with the U.S. economy than the oil and natural gas industry, and few make comparable contributions. Our products are used in almost every aspect of our day-to-day lives. From petroleum that fuels transportation to plastics used in everything from the latest high-tech gadgets to medical and sports equipment, our industry meets the needs of a complex and ever-expanding economy.
Currently, America’s oil and natural gas industry supports 9.2 million jobs in the United States and 7.7 percent of our nation’s Gross Domestic Product. Every day we deliver more than $86 million to federal coffers in rents, royalties, bonus payments and income tax payments. Our effective tax rate – averaged over the years 2006 through 2011 – is 44.3 percent, well above the 35 percent general corporate tax rate.
In addition to paying more than most American companies to federal and state governments, and investing in America’s future by injecting billions of dollars directly into our economy, between 2008 and 2010, America’s oil and natural gas industry spent nearly $156 billion each year investing in America’s infrastructure. To put this in context, the oil and natural gas industry accounts for almost 14 percent of all U.S. industries’ capital expenditures during that period. This is more than the capital expenditures of the utilities and transportation industries combined.
We also invest in America’s workforce. During the recession, as the U.S. economy was struggling to find its footing, the oil and natural gas industry was there to provide stability in an otherwise uncertain economy. From 2006 through 2011, the U.S. oil and natural gas industry directly created 119,511 jobs. Meanwhile, the other sectors of the economy lost over 4.5 million jobs. Also, wages in our industry grew by over 20 percent in that period. The average annual non-station salary for our industry in 2011 was $92,645. That’s 93 percent higher than the average private-sector salary of almost $48,000.
With the right policies, however, we could do even more to help our economy. If we adopt a full program of domestic oil and natural gas development – without punitive tax increases as some have proposed – we could create one million new jobs in seven years and 1.4 million jobs by 2030. We could increase government revenue by $127 billion by 2020 and add 4 million barrels’ worth of oil and natural gas production per day.
Thousands of jobs would flow to every state, with more to states where energy production is concentrated. Marcellus Shale development could create 76,000 jobs in Pennsylvania, 20,000 jobs in New York, and 17,000 jobs in West Virginia by 2015. In Ohio, the development of the Utica Shale could support more than 204,000 jobs in just four years.
Also, expansion of the Keystone XL pipeline to bring in increased supplies of secure Canadian oil could create more than 50,000 U.S. jobs by 2035.
With the right policies, American and Canadian energy supplies could provide 100 percent of U.S. liquid fuel needs within just 15 years.
All of this activity would also deliver billions more in revenue to federal and state governments as a result of increased rents, royalties, lease and tax payments. This could help us fund much needed government programs and help solve our nation’s debt/deficit issues.
This election, like many, was about who can provide answers to the tough problems facing our nation. While no one industry can do it all, producing more of our own energy can be a big boost to future growth. We will need more oil and natural gas, and we have ample supplies. We can either continue to import these resources from less stable parts of the world, or we can allow America’s oil and natural gas companies to do what they do best – create jobs and invest in America’s future.
We look forward to working with all re-elected and newly elected lawmakers to help address these challenges moving forward.
Brian M. Johnson is the senior tax advisor for the American Petroleum Institute (www.api.org).