“It’s a triple win,” API president Jack Gerard said. He said that the industry could create jobs, generate hundreds of billions in tax revenue and double North American oil production — although the main production increase would occur in Canada.
The ad cites a study by Wood Mackenzie, a consulting firm hired by API. Scott Mitchell, who oversaw the study as head of North America upstream research at Wood Mackenzie, said that only a third of the 1.4 million positions created would go to people working directly for the petroleum industry and that the rest would be indirect and induced jobs.
“To be confident about the induced job effects of additional spending is incredibly complex,” said Mark Fulton, head of research at Deutsche Bank’s team of climate change advisers. Citing such figures involves “going another step toward lack of accuracy,” he said.
The Wood Mackenzie study also makes assumptions about current policy. For example, it assumes that current regulations limit the number of Gulf of Mexico exploratory wells to 20 a year. But the number of exploration wells being drilled now is already well above that. As a result, gulf exploration would have little effect on job creation.
Josh Bivens, an economist at EPI, said the amount of job creation from industry spending depends on economic conditions. “In today’s economy, if an oil company decided to do something new, that would create jobs,” he said. “If unemployment were 4 percent, it would suck people away from other employment and there would be no net increase in jobs.”
Felmy, the API economist, retorted: “You may be moving jobs around,” but wages would rise because companies would be bidding for skilled workers.
Drilling further into the API numbers of existing petroleum industry jobs shows just how murky these numbers and definitions can be.
According to the BLS, the number of people in the United States drilling wells, extracting oil and gas, refining petroleum and manning gasoline stations is about 1.1 million. If sole proprietors and business partners are included, the number rises to about 2 million, according to the Commerce Department’s Bureau of Economic Analysis.
Kurt Kunze, an official at the BEA, said, “The big discrepancy in oil and gas extraction is that there are some big master limited partnerships with lots of partners. There is no way to separate out the people digging holes in the ground from someone who is just a financial partner.” He said given the number of partnerships, he would tend to use the lower BLS figure.
API used the higher figure. If half a million people were taken out of its baseline projection, the final total would have been reduced by 1.8 million.
Most of the jobs provided by big oil companies are overseas. At Royal Dutch Shell, for example, 21 percent of its 97,000 employees worked in the United States; the rest work in 89 other countries. Exxon Mobil has 4,970 people working in its Canadian Imperial Oil subsidiary, 885 in Norway and about 2,000 in Malaysia.
A study by Democrats on the House Natural Resources Committee last month found that the four biggest oil companies combined — Exxon Mobil, Chevron, Shell and BP — reduced their U.S. workforce by 11,200 employees between 2005 and 2010. BLS statistics show that although the number of oil and gas extraction positions has risen, the number of gasoline station jobs has dropped. The Democratic lawmakers noted that the four companies earned $546 billion in profits during that period.
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