Carpe Diem

America’s job-creating energy miracle

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While last Friday’s employment report reflects an economy struggling to create jobs during an extended, sub-par “jobless recovery,” it’s been a much healthier employment picture in one of America’s most successful “shovel-ready” job-creating industries: Oil and Gas Extraction.

The top chart above displays the monthly percentage changes in employment levels since January 2008 for oil and gas extraction jobs compared to total nonfarm payroll jobs. As of last month, total US nonfarm payroll employment is 2.3%, and 3.23 million jobs, below the January 2008 level. In contrast, the explosion of new oil and gas jobs has increased employment in the energy industry by more than 26% in the last five years.

The bottom chart above displays monthly employment for the US oil and gas extraction industry, which rose to the highest level in January (193,700) since August 1988, more than 24 years ago. In just the last three months, energy companies have hired 5,500 new employees for oil and gas extraction activities, which is a hiring rate of almost 100 new workers every business day. And that just accounts for the new jobs created that involve the actual drilling, extraction, and production of oil and gas.

A March 2012 study found that for every one new job added in oil and gas extraction activities, there were three new additional jobs created elsewhere in the economy. The report also found that “the jobs-multiplier effect of U.S. oil and natural gas activity is higher than many other U.S. industries, including the financial, telecommunications, software and non-residential construction sectors. This is the result of the energy industry’s long supply chains and relatively high levels of spending by employees and suppliers.” As a result of the multiplier effect, the U.S. economy has potentially been adding almost 400 new jobs per day over the three months due to increased oil and gas production.

Imagine all of the additional shovel-ready, energy-related jobs (direct and indirect) that could have been created since 2008 in the oil and gas industry (and its supporting industries), if the Obama administration had been a little less friendly to the taxpayer-subsidy-dependent, high-cost, unreliable but politically-favored “green” energies, and instead had been a little more friendly to the low-cost, job-creating, dependable fossil fuel industry (think Keystone XL pipeline) that doesn’t require picking the pockets of the taxpayers. Additionally, imagine how much higher the jobless rate might be today if we hadn’t had the tremendous “energy-stimulus” to the US economy that has resulted since 2008 from increased oil and gas drilling due to technological advances of hydraulic fracturing and horizontal drilling.

Related: See this recent Spiegel article about ”America’s energy miracle,” titled ”Full Throttle Ahead: US Tips Global Power Scales with Fracking.”

16 thoughts on “America’s job-creating energy miracle

  1. Also, I may add, if a country is prosperous enough to afford higher environmental standards, it can surely afford higher labor standards, including a higher real minimum wage.

  2. Too bad Obama is benefiting from an energy boom created by Bush-era policies. Fracking is directly the result of an increase into drilling and exploration research in 2002, as a response to 9/11.

    Without this energy boom, Obama would be in bigger trouble about the jobless nature of the economy.

  3. “a higher real minimum wage.”

    A higher real minimum wage creates more poverty, as it keeps lower-skilled people from getting jobs.

    Plus, a lower minimum wage would just ensure that more teenagers join gangs (since there are no jobs at their output level). This is what leftists want, so it is a feature not a bug.

    • How do you know lower-skilled people wouldn’t rather stay with their parents playing video games, join gangs, etc. than work for less than a subsistence wage, while poor immigrants are exploited for their hard work?

      • How do you know lower-skilled people wouldn’t rather stay with their parents playing video games, join gangs, etc. than work for less than a subsistence wage, while poor immigrants are exploited for their hard work?

        I’m pretty sure that’s exactly what happens. A higher minimum wage would attract even more poor immigrants who travel great distances at great personal risk in order to be exploited. Even more of those shiftless layabouts could stay at home with their parents playing video games and joining gangs, and whatever else you imagine them doing – or not doing.

        • Yes, I’m sure they prefer sharing a room with three other poor immigrants in California, riding a bike to work and sending a little money home, rather than sleeping in a tin hut with a dirt floor, or in a car, being unemployed, working for $1 an hour, or being a hobo.

          • Why do you find that so hard to believe?

            Didn’t you say you studied economics? How did you miss the basic parts about people wanting more than what they have and choosing what they think is their best option?

            Of course if you feel immigrants aren’t paid enough for their work you are welcome to pay the ones that work for you any amount you wish.

            If you feel you missed something about the role human nature plays, during your alleged economic studies, I would recommend you read or reread von Mises Human Action” That should give you everything you need to know, and help correct some of those misconceptions you seem to have.

            I’m not sure there’s any hope for your blind insistence that the demand curve for labor is up-sloping, though. That may be an incurable mental defect.

          • Ron, I’m sure you prefer being a slave than dying of thirst in the desert.

            Perhaps, you believe in slavery, along with simple and incorrect economics.

          • Ron, I’m sure you prefer being a slave than dying of thirst in the desert.

            Why yes, I do. I think most people prefer life to death. Don”t you?

            Perhaps, you believe in slavery, along with simple and incorrect economics.

            And there it is! Another oblique reference to the up-sloping demand curve for labor!

            Nice one, Peak.

      • It seems that some group will be exploited no matter what. Either poor immigrants or softhearted parents.

        At least those parents can feel good about the fact that their retirement years, which they have worked so hard to provide for all their lives, will be well spent preventing their offspring from accepting a demeaning and undignified starting wage.

        After all, they didn’t spend all those tens of thousands on their child’s education in ax grinding and gender studies only to see them forced to work at Walmart.

  4. To heck with the minimum wage, let’s go for a median wage at least. Based on 2011 wages that would be $10.75 an hour. It’s only fair.

  5. Imagine how much fuel we would have had we only embraced President Bush’s goal of mandated cellulosic ethanol. It was a pink-o vision, but you have to admire the scale.

    True, Range Fuels collapsed late in late 2011. I don’t know why, there was little sniggering in the right wing media.

    “Range Fuels Cellulosic Ethanol Plant Fails, U.S. Pulls Plug
    By Mario Parker Bloomberg

    Range Fuels Inc., a cellulosic ethanol company backed by as much as $156 million in U.S. loans and grants from President George W. Bush’s administration, is being forced by the government to liquidate its only factory after failing to produce the fuel.”

    Bush was so high on cellulosic ethanol. It was a much bigger program than anything Obama has dreamed up. Obama is a bit of a green-weenie next to Bush’s visions.

    “US President George W. Bush, in his State of the Union address delivered January 31, 2006, proposed to expand the use of cellulosic ethanol. In his State of the Union Address on January 23, 2007, President Bush announced a proposed mandate for 35 billion US gallons (130,000,000 m3) of ethanol by 2017. It is widely recognized that the maximum production of ethanol from corn starch is 15 billion US gallons (57,000,000 m3) per year, implying a proposed mandate for production of some 20 billion US gallons (76,000,000 m3) per year of cellulosic ethanol by 2017. Bush’s proposed plan includes $2 billion funding (from 2007-2017) for cellulosic ethanol plants, with an additional $1.6 billion (from 2007-2017?) announced by the USDA on January 27, 2007.
    In March 2007, the US government awarded $385 million in grants aimed at jump-starting ethanol production from nontraditional sources like wood chips, switchgrass and citrus peels. Half of the six projects chosen will use thermochemical methods and half will use cellulosic ethanol methods.”

    Gee, why did Bush jr. want pink-o mandated and subsidized cellulosic ethanol, in even greater volumes than subsidized and mandated corn ethanol?

    Ethanol as rural sop? GOP pink moonshine?

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