Purvin & Gertz Report Shows Petroleum Industry's Economic Impacts
WSPA recently hired Purvin & Gertz Inc. to update our petroleum industry economic impact analysis for California. The results are now in and, as expected, the study shows the petroleum industry is a major source of high paying jobs.
The petroleum industry is responsible for 332,968 jobs in California that generate $17 billion in wages and salaries. That’s a huge contribution to a state that has been losing its manufacturing and industrial employment base and that currently has an unemployment rate of 11.7 percent.
Outside of service stations, which employed close to 50,000 people, refining and oil and natural gas production were the largest job producers. Oil and gas production directly employed more than 18,000 Californians and refineries were responsible for another 14,500 jobs.
The study looked at both jobs directly associated with industry activity and indirect jobs created to support the petroleum industry’s economic activity. Of the 332,968 jobs associated with the petroleum industry, 94,860 were direct jobs and 238,108 were indirect.
That means for every job created by an oil company or other business directly associated with petroleum, another 2.5 indirect jobs are created in the economy.
This multiplier effect is especially pronounced in the refining and oil production areas. For every direct refinery job in California, another nine jobs are created. For every job in California’s oil and gas production fields, another 5.4 jobs are created.
In addition to the jobs and labor income generated by the petroleum industry, the study also looked at the industry’s contribution to state, local and federal governments through taxes and fees. Oil and natural gas companies provided $5.7 billion in taxes and fees to the state of California in 2009 – the last year for which publicly available data is available. Another $2.8 billion in taxes were sent to the federal government.
And those impressive numbers do not include property taxes. Because there is no comprehensive public source of information on property tax payments, Purvin & Gertz was not able to include property taxes in the total. However, in Kern County alone, seven of the top 10 property tax payers are oil companies which pay in excess of $234 million to the county annually, according to information published by the county.
The report paints a compelling picture of the oil and natural gas industries role as a major job created and contributor to California’s economic well being. Click on the link below to review the entire report.
Petroleum Industry Economic Impacts.pdf
Public Pension Funds Gain from Oil Industry Investments
A recent study commissioned by API shows California’s two large public employee pension funds have major holdings in oil and natural gas companies and those holdings provide substantial returns to the funds and their beneficiaries.
Investments in oil and natural gas companies by the California Public Employees’ Retirement System (CalPERS) and the State Teachers’ Retirement System (STERS) are providing strong returns for teachers, firefighters, police officers, and other public pension retirees in California, according to a study by Sonecon and released by API. The study showed oil and natural gas investments are outperforming other investments by public pension funds across the nation.
According to Sonecon, returns on oil and natural gas investments by CalPERS and STERS averaged 41 cents for each dollar invested compared to just 4 cents for other assets in those funds from 2005 to 2009. Throughout this period – which included good economic times as well as challenging times – oil and natural gas investments far outperformed other public pension holdings in the state. While oil and natural gas stocks made up an average of 4.1 percent of holdings in California’s public pension funds, they accounted for an average of 10.8 percent of the returns in these funds, according to the Sonecon study.
What this study demonstrates is that a healthy domestic oil and natural gas industry is good news for jobs and government revenue. It also provides stability to the nest eggs that millions of Americans are counting on for a secure retirement. In addition to public employees, millions of Americans with a 401k, mutual fund, or pensions also rely on the income and capital growth these companies provide for their retirement.
And all Americans benefit from the job creation and economic growth supported by the more than $2 trillion invested in U.S. capital projects over the past decade, including more than $58 billion in low and zero emitting technologies.
The full Sonecon report examines the top two public pension funds in 17 states, which collectively represent and cover more than a trillion dollars in assets and cover nearly half (48.1 percent) of all workers in the United States who participate in state and local government pension plans. States analyzed in the report are: California, Florida, Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina, and West Virginia.
You can download the full report HERE or the California specific report HERE.
Oil Industry Investments by Pension Funds - API - July 2011.pdf
Oil Industry Investment by California Pension Funds July 2011.pdf
California, Arizona, Hawaii, Nevada, Oregon, Washington
State and Regional Data Sheets
In addition to providing dependable energy for consumers and businesses, the petroleum industry in the western United States also is a major contributor to the region’s economic vitality.
The petroleum industry is responsible for more than 500,000 jobs in California, Arizona, Nevada, Oregon, Washington and Hawaii, with an annual payroll of $36 billion. Total sales for the industry were almost $220 billion. In addition, excise, sales, corporate income and personal income taxes provided $9 billion to $12 billion in revenues for government services.
These and other revealing facts are contained in two new economic impact reports prepared by Dr. Jose Alberro of LECG consulting. Using the most recent public data available, Dr. Alberro documents the petroleum industry’s contributions to the economic well being of the western Untied States.
His study of the six-state WSPA region is called “The Importance of the Petroleum Industry to the Economy of the Western States,” and is an update of data first compiled in 2002 and updated in 2006.
A second study, called “The Importance of the Petroleum Industry to the Economy of Four California Regions” looks at the economic contributions our industry provides to four regions in California – Southern California, the San Joaquin Valley, the Central Coast region near Santa Barbara and the San Francisco Bay Area. These regions were selected because they are centers of oil production in the case of the San Joaquin Valley and Central Coast and refining in the case of Southern California and the Bay Area.
Petroleum industry jobs, for the most part, also are high-paying jobs. According to Dr. Alberro’s report, the men and women who work in the refining, production and pipeline transportation portions of the industry earn salaries and wages that are 46 percent to 72 percent higher than the average earnings for private sector workers.
Both of these reports can be downloaded from this website. We hope you find them informative. We believe they accurately reflect the petroleum industry’s contribution to our region’s prosperity and quality of life.
According to the Washington Research Council, in 2011, Washington state's five refineries directly provided 1,986 full-time jobs, paying an annual average wage of $120,276. In addition, the refiners employed, at high wages, 2,919 contract workers on an average day, doing maintenance, capital repair and capital replacement.
The refiners indirectly created additional Washington state jobs in industries from which they purchased goods and services, including transportation, construction, utilities and business services. Spending of the income earned in these direct and indirect jobs created even more jobs.
Washington Economic Impacts 2011.pdf
Summary of Washington Economic Benefits -2013.pdf
The sum of all these effects was almost 26,000 jobs and $1.7 billion in personal income for Washington State in 2011. From this activity, state and local government received $48 million in sales and use taxes and $120.5 million in business and occupation taxes.