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November 6th, 2012

Oil and Gas Industry Over-Inflates Jobs Projections…Again

By Hugh MacMillianfracking for natural gas

 A recent report from IHS CERA, a firm with a history of reports favorable to the oil and gas industry, claims that unconventional oil and gas activities currently support 1.75 million jobs in the U.S. economy and will support a total of 3.5 million jobs by 2035. This forecast, while good public relations for the oil and gas industry, is misleading at best. 

Let’s ignore for the moment that the study was paid for by the American Petroleum Institute, the American Chemistry Council, the Natural Gas Supply Association and the U.S. Chamber of Commerce’s Energy Institute and just address the claims.

A closer look reveals that only 360,456 of the maximum of 1.75 million jobs that IHS CERA associates with the oil and gas industry are “direct” jobs. These are the jobs that result from direct spending by the industry on every aspect of exploration, production and transport, including accountants, lobbyists and lawyers. The remaining 80% of the predicted jobs are “indirect” or “induced” jobs, resulting from a spillover effect. 

It is important to look at the jobs the oil and gas industry is claiming credit for. Incredibly, the industry claims to sustain over 10,000 jobs in the “Scenic and Sightseeing Transportation” sector and the “Motion Picture and Sound Recording Industries.” Matt Damon must be so thankful! Additional sectors include “Crop Production,” “Fishing, Hunting and Trapping,” and “Performing Arts, Spectator Sports, and Related Industries”. 

But the fact is, other forms of spending would also create a large number of jobs across the economy. The oil and gas industry wants the public to think that drilling and fracking is an economic cure-all, but massive deployment of energy efficiency and renewable energy technologies and investments in transit systems for energy conservation would likewise have enormous spillover effects. Such spending would also avoid the pitfalls of fossil fuels. Remaking the U.S. energy system to wean us off of fossil fuels would not only avoid the hidden costs of dirty energy, it would also avoid the destructive pattern of local boom-and-bust cycles that characterizes oil and gas development. 

Another big problem with the IHS CERA projection is that it derives from a proprietary model that is impossible to verify. Yet, ironically, IHS CERA says, “[t]he model is not a black box: it functions like a personal computer spreadsheet…”.  But for anyone reading the report, the model is a black box – its inner workings, key parameters and underlying data remain a mystery.

Finally, IHS CERA fails to reconcile the large uncertainties surrounding shale gas and tight oil development. Assumptions about long-term capital expenditure per well, well productivity and access to public lands are based on industry’s hopes and dreams, not on established trends or realistic plans. 

Overall, it is impossible to see this report as anything but expensive public relations for the oil and gas industry, paid for by some of its biggest shills. It is just one of many industry-funded reports that creates an illusion of economic benefits to justify allowing the oil and gas industry to drill and frack anywhere and everywhere it wants regardless of the costs to public health, the environment and the climate.

One Comment on Oil and Gas Industry Over-Inflates Jobs Projections…Again

  1. Nathan says:

    I’d be hard-pressed to analyze their public relations claims better. The claims about fracking from the industry and their shills were made by the same people that engineered arguments to overturn parts of the Bank Holding Act of 1933, et al., that culminated in the Financial Services Modernization Act, that allowed the credit crisis to happen, and also shouted down all the people (and their were many,) that warned of the crisis.

    These people have no credibility, and they know it, but they have so little respect for the intelligence of the electorate they continue to spout lies, misrepresentations, and ad hominem attacks while sullying the credibility of organizations and schools with donatives in exchange for favorable studies.

    If you aren’t mad about it, you haven’t been paying attention, and it may affect how long you and or your friends and family live.

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