LMOGA Economic Energy Sector Impact Study

11 01, 2011 by KATC

Louisiana Mid-Continent Oil and Gas Association released findings of a study conducted by Dr. Loren Scott on the impact of the extraction, refining and pipeline industries in Louisiana. Dr. Scott found the three industries cumulatively supported 310,217 jobs in the state, generated over $16.1 billion in household earnings for Louisianans, and supported $77.3 billion in sales by Louisiana firms in 2009.

Findings also indicate Louisiana is the number one producer of crude oil (including federal OCS production), number two among the states in petroleum refining capacity and the number three producer of natural gas among the 50 states. "These findings make a compelling case about the major role the extraction, refining and pipeline industries play in the state economy, particularly relative to jobs," LMOGA President Chris John said. "On average, the job multiplier for these three industries is five. That is, for every job created in these sectors four additional jobs are created through other sectors in the state. In today's economy, the significance of that statistic is huge."

Another measure of the industry's impact on Louisiana is the value added benefit. Value added is a broader measure of the total income created directly in an industry. Dr. Scott's report estimates the value added impact of the oil and gas extraction sector is $43 billion in total income. The refining sector's value added in 2009 was $11.4 billion. The extraction, refining and pipeline industries revenue make up a significant portion of state income, with nearly $1.4 billion in state taxes and fees in FY10 alone. Through the $16.1 billion in household earnings generated by these three industries, state government indirectly was able to collect an additional $1,125,100,000 in taxes in FY10, for a total boost to the state treasury of $2.5 billion in FY10.

A very conservative estimate is that these three industries directly paid $298 million in ad valorem taxes to local governments in the state in 2009. Further, the $16.1 billion in household earnings generated by these three industries added approximately $707 million indirectly to the treasuries of local governments in FY10, for a total of just over $1 billion contributed to local government treasuries. "Louisiana won the flip of the coin when it came to the geographical distribution of natural resources and this data clearly demonstrates the development of these resources by industry have had staggering direct and indirect impacts across all parishes of the state," Dr. Scott said.

According to Dr. Scott's report, energy jobs and earnings are found in all of Louisiana's 64 parishes in 2010. Further, there were 15 parishes with in excess of 1,000 workers employed in these three industries.

Louisiana Department of Natural Resources Secretary Scott A. Angelle said he's confident through effective management of natural resources, the state's energy sector will contine to be a leader among states not only for its contributions to America's energy future, but also for its contributions to our economy. "The state of Louisiana has a long and proud history of finding the fuel that energizes America, and it is no surprise that through the careful management of our state's abundant natural resources, Louisiana continues to rank at or near the top of national energy production lists," Angelle said.