Energy sector recovering fast in Western states

October 21, 2013
Light illuminated a shale gas drilling rig (Photo: Bartek Sadowski/Bloomberg)
A shale gas drilling rig (Bartek Sadowski/Bloomberg)

Advances in technology, increases in domestic demand and new land to explore have fueled the mining and gas exploration industries in several Western states, and job growth in a sector hit hard by the great recession has begun to surpass pre-recession levels.

According to a new report from the Federal Reserve Bank of Kansas City, the energy industry in Colorado and New Mexico is now employing more residents than at pre-recession peaks. At the same time, however, construction jobs remain well below pre-recession levels, and government employment is fading in New Mexico, which had long relied on national laboratories for thousands of jobs.

Meanwhile, energy-related jobs in Wyoming have fallen slightly in the last year and remain below pre-recession levels as the price of natural gas and coal — which Wyoming relies on more than oil — have slumped.

Nationally, just 0.6 percent of jobs are in the energy sector. But in Colorado, New Mexico and Wyoming, that percentage is much higher. The share of energy jobs as a percentage of the entire economy is twice as high in Colorado as it is in the country as a whole; New Mexico’s energy industry accounts for nearly five times as many jobs as the national average; and Wyoming, where more than one in 12 workers are employed by an energy or mining interest, is 13 times more reliant on those jobs than the U.S. average.

Those jobs pay much better in those states than they do in the rest of the country. The average annual wage in the natural resource and mining industry was $58,476 in New Mexico, $78,358 in Wyoming and  $80,163 in Colorado, all of which are higher than the national average of $55,933 for that sector.

Those high incomes, along with the severance taxes that energy companies pay to extract oil, natural gas and coal, have helped rebuild state budgets squeezed by slumping tax revenue during the recession. Wyoming collected $968 million in severance taxes, while New Mexico took in $768 million in severance taxes last year, according to U.S. Census data.

Severance tax receipts by state, in thousands of dollars:

(Source: U.S. Census Bureau)

Alaska, which collected more than $5.7 billion in severance taxes, and Texas, which took in $3.65 billion, lead the nation in severance tax collection.

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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