INDUSTRIES

IN THE
U.S. ECONOMY
The Oil and Gas Industry and its
Impact on U.S. Economy
1)A Brief History of the Industry
• Dependency on imported sources of energy
• Economic losses and inflation in the 1970s
• “Shale Revolution’’ of the 1990s
• Modern and advanced methods of extraction
• Process more speedy which impacted the supply positively
• Price hikes and it’s impact of the profitability of the industry
• Increased investments
• Supply amplified
• New Methods such as hydraulic fracturing and horizontal drilling
• U.S. production of oil and gas has significantly increased
• Positive effects on the U.S. economy
• Reduced dependency on imported energy
• Increased state dependency on the industry
EXHIBIT 1
2)The Contribution of the Oil and Gas
Industry to the U.S. Economy
The industry benefits the U.S. economy in terms of five
main certain ways:

Effects on
Shares in
Employment the state
the GDP
economies

Decreasing reliance on
Sales
imported sources of energy
 EXHIBIT 2
Despite the high inflation rates in the country, the economic
benefits that the U.S. economy has derived from the Oil
and Gas Industry have been more than just a double in the
past decade.
 EXHIBIT 3
The exhibit states figures for both U.S. and individual states
such as Oklahoma, Wyoming, North Dakota, Texas, Alaska,
New Mexico and Louisiana are stated.
a)Employment in the Industry and
its Impact on National Employment
and Personal Income Levels
• Deflation - U.S. states such as West Virginia, Wyoming,
Delaware, Oklahoma, Louisiana, and Texas suffered great
losses
• Search for new avenues
• Employment levels in the industry previously 7.3%-13.7%
• In 2000 they dropped to 2.5%-7.4% (Texas)
• Inflation & shale revolution completely overturned the situation
• By 2011, Alaska, Louisiana, New Mexico, North Dakota,
Oklahoma, Texas, West Virginia, and Wyoming had the
biggest shares in the energy employment sector
• Oil and gas industry forms a small share of the total
employment in U.S.
• Alone the oil and gas industry has been a major source of
increased employment
• Employment in the industry has seen a rise of around 35%
while total jobs in U.S. have only risen by 7% during this time
EXHIBIT 4
EXHIBIT 5
 EXHIBIT 6
Personal income levels in the industry are also relatively
high in comparison to the national average.
b)The Oil and Gas Industry and its
Contributions to the GDP
• The oil and gas industry barely forms a share of less than
5% of the GDP
• But its contributions to state economies of the main energy
providing states are indeed significant
• The average of less than 3.9% of a state contribution to the
GDP may not form a major share of the economy but still is
a vital contribution
EXHIBIT 7
c)Effects on State Economies
• State economies will have variable responses
• Effects depend on the shares of the state in the industry
• Effects on the industry’s policies on different states
• Losses to nearly 42 states of the country
• 8 main energy producing states benefitted greatly
• Based on the elasticity of employment values an average
increase of 10% in the oil and gas prices would lead to a
reduction in employment by nearly 0.2%
• Value is not outrageous for U.S.
• Elasticity of employment for the industry remains to be an
overall positive value of 0.40 for the country
• An increase in crude oil prices of nearly 25% will decrease
employment in most of the states with only a rise in
employment in the energy producing states themselves
• For the energy producing states price hikes mean benefits
EXHIBIT 8
d)Sales and Imports
• Industry’s domestic sales have increased greatly
• U.S. which has been a great importer of the resource is
now largely self-sufficient
• Country’s own production has been on a rise constantly
since the shale boom
• Introduction of alternative energy sources and the impact
• Fuel efficiency, it’s expected results and the case of the
exactly opposite
• Price hikes and price elasticity of demand of oil and gas
EXHIBIT 9
EXHIBIT 10
• U.S. cumulative trade deficit - $7.1 trillion (2000-2012)
• The oil and gas industry has had a fair share in these
trade deficits
• In 2012 the trade deficit for oil was equivalent to 55% of
the trade deficit in goods and services
• Since the shale boom the oil and gas trade deficit has
declined
• Though import levels of oil and gas will completely
diminish but they will surely decline
• Decline in oil and gas trade deficit does not have
significant effects on the overall trade deficit of the country
EXHIBIT 11 – PART 1
EXHIBIT 11 – PART 2
3)The Oil and Gas Industry and its
Comparison to the Coal Industry
• U.S. is largest producer of natural gas and the third largest oil
producer in the world
• Shale revolution and its impact on the Coal Industry
• U.S. Environmental Protection Agency’s (or EPA) “war on coal”
• Greatly oversupplied and with a considerable slump in demand
• U.S. with its coal production in nearly 25 states ranks as the
second largest global producer of coal
• The shale boom may have not benefitted the Coal industry but
the industry has seen its own rise based on technological
advancements
• The share of the entire mining industry remains below 5% and
the Coal Industry is just one part of it
EXHIBIT 12
EXHIBIT 13
• Exports in the Coal Industry exceed the import
• Positive trade balance for the U.S. economy
• In both cases of changes in employment and average
annual pay the changes in the Oil and Gas Industry have
higher values in comparison to the Coal Industry
• In the form of percentage changes, those for the average
annual pay in the Coal Industry exceed those in the Oil
and Gas Industry by 0.3%
EXHIBIT 14
EXHIBIT 15
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