The U.S. national unemployment rate is 8.2%. That is pretty high. But one thing is clear: states that produce oil and gas, on average, are in significantly better shape than those that don’t. Take a look:
Data compiled and graphed by Scott McNally. Data sources: Unemployment rates by state – Bureau of Labor statistics (2011). Population – U.S. Census (2011). Oil and gas production data - The Energy Information Agency (2010 & 2011).
There are six states in the union that produce more than 100 barrels of oil equivalent (BOE) per person per year. (BOE means total oil and gas production, not just oil). The average unemployment rate among these states is 6.7%. The next six most productive states produce between 33 and 100 BOE per person per year, and the average unemployment rate among these states is 7.9%. Finally, the other 38 states produce less than 33 BOE per person per year, 27 of which don’t produce any oil and gas at all. These states have an average unemployment rate of 9.4%.
Now, oil and gas is not the only industry that influences employment, but we do know that oil and gas production requires people, and the more you produce, the more people you employ.
However, there are a few interesting things to note in the data. Texas, our largest producer of petroleum, and Califonia, our 8th largest producer, have relatively high unemployment rates – 8.1% and 11.9%. New Hampshire and Vermont, which don’t produce any petroleum at all, have unemployment rates of 5.4% and 5.6%, respectively. (Texas and California are also the two most populous states, so their per capita production ranks are 7th and 17th.)
Alaska also has an interesting story. It is our number 1 producing state per capita and our number 2 state in overall production, but has a not-that-low 7.5% (2011) unemployment. Furthermore, when you overlay Alaska production numbers with unemployment numbers, they seem to be totally unrelated, especially since about 1990. Since then, unemployment has bounced around between 6 and 9 percent, but production has dropped precipitously. See here:
Clearly, there are other factors at play. It would be foolish to claim that oil and gas industry is the only contributor to jobs, but we do know that it is a significant contributor.
Investments in renewables and other industries is critical, as I mention in other posts, but if oil and gas production is good for the economy and good for jobs, why would we spend approximately $1 billion per day importing oil? Instead, we should reinject as much of that money as we can back into safely and responsibly producing domestic petroleum, and creating American jobs.
Scott McNally has a B.S. in Chemical Engineering from the University of Texas. He has several years of experience in the energy industry, working as an Environmental Engineer Valero Energy Corporation, a Project Engineer for Shell Oil Company, and an energy and climate research intern for the White House Council on Environmental Quality. Scott is currently an ORISE Fellow at the U.S. Department of Energy, where he works on developing breakthrough energy technologies at ARPA-E. Scott is a frequent guest author at Plugged In – he was invited to write for Plugged In by Melissa C. Lott. You can reach Scott via e-mail at scottmcnally at gmail dot com..