The State of American Energy is Remarkable
Today the American Petroleum Institute (API) released its annual report, the State of American Energy. The report leans heavily on government data to highlight the growth and contributions of each sector of the U.S. energy portfolio. Let’s take a look at the state of oil and natural gas specifically.
In recent history the United States was largely dependent on foreign nations to supply its energy. Events like the 1973 Oil Embargo serve as harsh reminders of what a predominantly energy dependent scenario looks like. Today, the situation is quite different. Thanks in large part to shale development, the United States has bolstered its energy security. As the New York Times puts it:
“[T]he development of America’s shale resources is providing a level of supply security and price regularity for the global oil market, which means it’s also preventing the types of price spikes that ultimately harm American consumers.”
The 2015 State of American Energy echoes this finding by relying on figures from the U.S. Energy Information Administration’s (EIA) “September 2014 Monthly Energy Review” (Table 3.1). From API’s report:
“Since 2008, America’s crude oil production has surged by 70 percent, rising from an average of 5 million barrels per day in 2008 to 8.6 million barrels per day in August 2014. At its current production rate, the United States is anticipated to surpass both Saudi Arabia and Russia, historically two top energy producers, to become the world’s largest producer of oil this year” (p.5).
The growth in domestic production has also reverberated throughout the economy, contributing over one trillion dollars to U.S. Gross Domestic Product and creating scores of American jobs. API includes findings from a PricewaterhouseCoopers study in the State of American Energy to reinforce this fact:
“The oil and natural gas industry contributed $1.2 trillion to U.S. Gross Domestic Product (GDP) in 2011, and at a time when other industries have been slow to add jobs in the wake of the recent recession, the oil industry supports 9.8 million jobs across the nation, up 600,000 from just two years earlier” (p.5)
These figures represent eight percent of the U.S. economy, and using data from the Bureau of Labor Statistics, API points out that workers in the oil and gas industry “earn higher-than-average wages — in fact, nearly double the national average wage across all industries” (p. 5).
A Wall Street Journal article headlined, “The U.S. Energy Boom Lifts Low-Income Workers Too” previously reported that the average annual wage in the oil and gas industry was approximately $107,200 in 2012—which is actually more than double the national average.
American Natural Gas
The abundant supply of clean-burning natural gas is supporting the U.S. economy as well. API included findings from an IHS study, The Contributions of the Natural Gas Industry to the U.S. National and State Economies, to illustrate this point:
“Today, the natural gas industry supports nearly 3 million jobs and adds about $385 billion to the national economy each year” (p. 29).
A separate IHS study observed that the development of shale resources through hydraulic fracturing supported 2.1 million jobs in 2012.
The study also notes that these numbers will only continue to grow; in 2025 unconventional shale development will support 3.9 million jobs. This figure includes more than 500,000 manufacturing jobs and 319,000 chemicals sector jobs.
As EID has reported on before, lower energy costs as a result of increased natural gas supplies translated into an additional $1,200 in disposable income for American households in 2012. API, using data from a 2014 IHS study, notes that these savings will grow to $3,500 by 2025 (p. 29).
In addition to the economic benefits of being the leading global leader in natural gas production, the State of American Energy also touted the benefits of using this abundant energy supply. As the cleanest-burning fossil fuel, increased natural gas usage has slashed U.S. air emissions. From the report:
“U.S. carbon dioxide (CO2) emissions are near 20-year lows, and a major reason for that progress is the development and use of America’s abundant natural gas resources” (p. 30).
This point is in-line with the nation’s top experts, too. As Environmental Protection Agency Administrator Gina McCarthy stated in 2013:
“The pollution that I’m looking at is traditional pollutants as well as carbon. And natural gas has been a game changer with our ability to really move forward with pollution reductions that have been very hard to get our arms around for many decades.”
Data from the EIA’s Annual Energy Outlook (above, pulled from the State of American Energy) show that oil and natural gas will continue to account for the lion’s share of U.S. energy consumption. With oil production at its highest level in nearly three decades and natural gas production levels that are second to none, the United States is in a prime position to meet its own energy needs for decades to come. API’s CEO, Jack Gerard, has great optimism for what U.S. energy production holds for the future. In Gerard’s personal note at the conclusion to the study, he writes:
“America’s energy future is bright. With our abundant array of resources, technological expertise and skilled workforce, the United States stands on the threshold of energy self-sufficiency at a level unthinkable just a few years ago. Given the right policies, we can create jobs, reduce emissions and enhance energy security all at the same time” (p. 49).