A new study commissioned by a national oil and gas trade group details the number of jobs and economic boost the industry has in Pennsylvania, not just in the gas fields but in manufacturing and service industries.
The American Petroleum Institute’s study, released Thursday, employed PricewaterhouseCoopers to analyze federal government data from 2019 to determine that the oil and gas industry was responsible for 102,500 direct and 377,800 indirect jobs in the state. That’s 6.1% of the state’s total employment prepandemic.
The study finds that $14.5 billion in direct labor income and a total of $40.5 billion in labor income across the economy — nearly 8% of the total — comes from the industry, while it kicked in $78.4 billion directly and indirectly into the state’s economy. That’s just about 10% of the state’s total GDP.
The API analysis comes at a challenging time for the industry, which has been buffeted by topsy turvy commodity prices for both oil and gas over the past two years or so as well as recent moves by investors and the Biden administration to limit or constrain oil and gas production. While the oil industry was birthed in western Pennsylvania, it’s the natural gas industry over the past decade and a half that has brought a massive influx of investment in the Pittsburgh region and across Appalachia as well as resulting jobs, royalties and investment in drilling and infrastructure. Pennsylvania is the second largest natural gas producing state in the country.
API Pennsylvania Executive Director Stephanie Catarino Wissman told the Business Times in an interview that the API’s period study helps to provide legislators and other government officials the context around the economic and jobs benefits of the industry. And it’s not just direct oilfield and gas field jobs.
“That’s whether it’s a manufacturing company, construction workers, wholesale, retail and transportation and warehousing workers,” she said. “We want to make sure policymakers understand the significance of our industry and how much we play in the economy.”
And it’s writ large in the API study, both state by state and also nationally.
The purpose, said API SVP Frank Macchiarola, is to “provide policymakers with a sense of what’s really at stake concerning jobs and the economy when they’re adopting policies that impact the oil and gas industry,” Macchiarola said.
It’s even more important, Catarino Wissman and Macchiarola said, with the industry and the country recovering from the economic impacts of the Covid-19 pandemic in 2020 and 2021. The data PwC analyzed comes from the U.S. Bureau of Economic Analysis’ 2019 figures, which Macchiarola said are the most recent available to provide an impact not only on employment but the economy.
He acknowledged that other data said that the oil and gas industry suffered, as did many other parts of the economy, during the early months of the pandemic. But he said that the oil and gas industry has returned to prepandemic levels.
API’s study comes the same week as a study, by the Ohio River Valley Institute, the questioned the economic impact of the shale revolution on Appalachia. The study said that while GDP in a 22-county area in Pennsylvania, Ohio and West Virginia grew from 2008 to 2019 due to the shale industry, the impact locally on jobs was minimal, only a 1.6% increase due to the capital-intensive and transient nature of the workforce. Only about 22% of the $80 billion spent so far on shale development in Appalachia has gone back to local economies, ORVI said.
Catarino Wissman challenged those figures, pointing to the billion in labor income and boosts to the state’s GDP that are outlined in the PwC/API report. She said that beyond that, the royalty payments and $2 billion from the impact fee have also directly helped local communities all over Pennsylvania.