As Economy Lags, Shale Boom Spurs Rapid Job Growth

While most of the U.S. economy endures a slow recovery process, the energy sector continues to flourish. Job opportunities in oil and natural gas increased by 40 percent from 2007 to 2012, according to new data from the Bureau of Labor Statistics.[i] Compare this to just 1 percent growth for total private-sector employment over the same period.  The key to this job growth has been the boom of domestic energy production on state and private lands.

In 2012, the U.S. recorded the largest oil and natural gas increases in the world, as well as the largest increase in oil production in American history. U.S. crude oil production increased from around 5 million barrels per day in 2007 to nearly 6.5 million barrels per day in 2012, according to the Energy Information Administration (EIA). Natural gas production also increased from 19,266 billion cubic feet in 2007 to 22,902 billion cubic feet in 2011.

As a result of the domestic energy boom, oil and gas companies added 162,000 jobs from 2007 to 2012. The largest job growth has been in the support sector, which includes exploration, excavation, and well construction. The support sector alone has added 102,000 jobs since 2007, employing a total of 286,000 people by the end of 2012.[ii]

This rapid growth does not appear to be slowing down anytime soon, as proved reserves[iii] in the U.S. continue to rise. A recent report from EIA shows that proved oil reserves increased by 15 percent (nearly 3.8 billion barrels) in 2011, the largest volumetric increase in U.S. history. Proved reserves of wet natural gas increased by 31.2 trillion cubic feet (TCF), the second largest increase since 1977. [iv]

The development of America’s vast energy resources is occurring primarily on state and private lands. On federal lands, a sluggish permitting process (228 days on average) continues to stonewall energy production and job creation. As a result, oil and natural gas production declined by 15 percent on federal lands between 2010 and 2012.

The most notable success story has been North Dakota, where it takes just 10 days on average to get a permit to drill. Production on state lands in the Bakken and Three Forks shale plays has skyrocketed in recent years. From 2007 to 2012, North Dakota’s crude oil production increased from 124,000 barrels per day to 663,000 barrels per day,[v] an increase of 434 percent. Production will most likely continue to rise, as proved oil reserves in North Dakota increased by 771 million barrels from 2010 to 2011. The increase in domestic energy production is a driving force behind the state’s 3.1 percent unemployment rate, the lowest in the nation.[vi]

Thanks to domestic energy boom on state and private lands, oil and gas companies are creating jobs at a time when the rest of economy continues to sputter. Opportunities in the oil and gas sector have expanded despite policies that restrict energy development on federal lands. Opening up federal lands to oil and gas development would provide a huge boost to the economy and put even more Americans back to work.

IER Press Secretary Chris Warren authored this post.