September 2013, Vol. 240 No. 9

In The News

Oil And Gas Employment Shows Strong Growth Over Private Sector

The Energy Information Administration reports that from the start of 2007 through the end of 2012, total U.S. private sector employment increased by more than 1 million jobs, about 1%. Over the same period, the oil and natural gas industry increased by more than 162,000 jobs, a 40% increase.

The report focuses on the Labor Department’s Bureau of Labor Statistics (BLS) data for oil and natural gas industry employment in three categories:

  • Drilling – related to the spudding and drilling of wells, as well as reworking of wells, which accounted for more than 90,000 jobs by the end of 2012, an increase of 6,600 jobs since 2007.
  • Extraction – companies primarily engaged in operating, developing, and producing oil and natural gas fields, including exploration and all production to the point of shipment, which totaled more than 193,000 jobs by the end of 2012, 53,000 more jobs than in 2007.
  • Support – oil and natural gas operations, including exploration, excavation, well surveying, casing work, and well construction, which saw a strong surge. This sector accounted for more than 286,000 employees at the end of 2012, up more than 102,000 jobs from 2007. (BLS considers support to be for the above activities, and does not include jobs created in other industries such as manufacturing, housing, retail, education, and food services.)

EIA pointed out that about half of the workers employed in crude oil and natural gas production are in the support category of oil and natural gas industry employment, and employment in this category accounted for the bulk of the increases. Combined, the three industry categories equal one-half of 1% of total U.S. private sector employment.

The report noted while both the support and drilling industries were heavily affected by the recession, these industries have recovered quickly, suffering only minor effects from the temporary moratorium on offshore drilling as a result of the Deepwater Horizon spill in 2010. Between January 2007 and December 2012, monthly crude oil production increased by 39%, and monthly natural gas production increased by 25% (see accompanying chart). Employment in the oil and gas drilling, extraction and support industries continued to contribute to overall private sector employment as the U.S. economy recovers from the 2007-09 recession.

Beyond these sectors, oil and gas industry activity also directly supported output and employment in other domestic sectors, such as suppliers of pipe, drilling equipment and other drilling materials. In addition, as with other forms of economic activity, there are indirect employment effects stemming from purchases made by industry and employees spending of their incomes.

Because employee expenditures are closely tied to their incomes, higher paying jobs, such as those in the oil and gas sector, tend to have larger indirect effects on output and employment than lower paying jobs.

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