Oil & gas industry impacts broader state opportunities

Extraction, pipelines and refineries are the three industries that cumulatively supported 310,217 jobs, generated $16.1 billion in household earnings and supported $77.3 billion in sales by Louisiana companies in 2009.

According to research conducted by economist Loren Scott, these findings support numbers that identify Louisiana as the No. 1 producer of crude oil, including federal outer continental shelf production, in the nation.

Louisiana is also No. 2 in refinery capacity and the No. 3 natural gas producer among all 50 states.

“These findings make a compelling case about the major role extraction, refining and pipeline industries play in the state economy, particularly relative jobs,” Louisiana Mid-Continent Oil and Gas Association President Chris John said. “On average, the job multiplier for these three industries is five. That is, for every job created in these sectors four additional jobs are created through other sectors in the state. In today’s economy, the significance of that statistic is huge.”

Scott said that when looking at how one industry impacts another, a broader value added measurement become a broader aspect in the economic picture.

The renowned economist said, as an example, that the value added impact of the oil and gas extraction sector represents a total income of approximately $43 billion.

The refinery sector added $11.4 billion in value added income during 2009.

During fiscal year 2010, revenue from the refinery and pipeline industries yielded $1.4 billion in state taxes and fees.

With $16.1 billion in household earnings generated by extraction, refining and pipeline operations, state government was indirectly able to boost the state treasury by $2.5 billion.

John said that conservative estimates indicate that extracting, refining and pipeline industries in Louisiana paid $298 million in ad valorem taxes to local governments during 2009.

By the completion of fiscal year 2010, household earnings generated $707 million into local government coffers.

“Louisiana won the flip of the coin when it came to geographic distribution of natural resources and this data clearly demonstrates the development of these resources by industry have staggering direct and indirect impact across all parishes of the state,” Scott said.

Scott’s report revealed that energy jobs and earnings were represented in all of Louisiana’s 64 parishes in 2010, with 15 parishes each having more than 1,000 workers employed in one of the three oil and gas related industries.