Employment Impacts of Upstream Oil and Gas Investment in the United States

Abstract

Technological progress in the exploration and production of oil and gas during the 2000s has led to a boom in upstream investment and has increased the domestic supply of fossil fuels. It is unknown, however, how many jobs this boom has created. We use time-series methods at the national level and dynamic panel methods at the state-level to understand how the increase in exploration and production activity has impacted employment. We find robust statistical support for the hypothesis that changes in drilling for oil and gas as captured by rig-counts do in fact, have an economically meaningful and positive impact on employment. The strongest impact is contemporaneous, though months later in the year also experience statistically and economically meaningful growth. Once dynamic effects are accounted for, we estimate that an additional rig-count results in the creation of 37 jobs immediately and 224 jobs in the long run, though our robustness checks suggest that these multipliers could be bigger.

Keywords: Oil production, United States, Natural gas, Commodity boom, Job creation, Employment, Econometric models, Time series, energy, drilling, prices, investment, oil prices, gas extraction, drilling activity, primary energy, gas production, approach, gas development, gas industry, activities, coal, rotary rig, fossil, crude oil, energy prices, energy sources, energy production, gas prices, wind, power, fuels, natural gas prices, fuel production, wind generation, fossil fuels, tax revenues, price of oil, nuclear electric power, vertical axis, natural gas production, oil shocks, domestic supply, spot price, electric power generation, gas resources, coal reserves

JEL Classification: J21