A new study compiled by 24/7 Wall Street revealed that oil and gas extraction is the top economic driver in most western states. Using data from the U.S. Bureau of Economic Analysis, the study shows oil and gas as the number one industry behind government jobs in Colorado, New Mexico, North Dakota, Oklahoma, Wyoming and Texas.
Colorado had the most impactful data, showing a five-year gross domestic product (GDP) increase of 112%. In Oklahoma, the industry contributed more than $38 billion to the state economy, while Texas saw nearly $200 billion contributed to its economy. The industry in the Lone Star State grew nearly 60% over the five years surveyed, while the Sooner State saw an increase of 94%. New Mexico saw $11 billion in GDP, which was a 90% increase in production, while North Dakota saw an increase of 67%. The industry added $5 billion to the economy of Wyoming during the time frame studied. North Dakota experienced a 67% expansion.
The economic impact information revealed that the industry employs thousands of workers, many of whom make an average salary of more than $100,000 per year. The average salary in Oklahoma was $148,000 for the 18,000 workers employed in the state’s oil and gas sector, while in Colorado it was $184,000. New Mexico’s average salary was $109,000, while Wyoming workers averaged $134,000 per year compared to Wyoming’s $113,000. These salaries outpaced jobs in other non-producing states, such as Maryland, Massachusetts and Michigan where healthcare is king and the average salary is $60,000.
A recent report from the Federal Reserve Bank of Dallas also showed that while quantifying the economic benefits these states have experienced is a challenge, no one can deny that the GDP in these shale regions benefitted greatly from the recent increase in domestic production. The Fed went as far to report that there is good reason to believe that the shale boom added 1% to U.S. GDP in the years 2010 to 2015.
The Dallas Fed showed that Texas and North Dakota benefitted the most, with the latter’s output rising from 235,000 barrels per day at the start of 2010 to 1.4 million today. Likewise, production in Texas has risen from 1.1 million barrels to 5 million per day. The Lone Star State is responsible for more than half of the shale produced in the U.S. every day.
The report went on to state that the increased use of horizontal drilling and hydraulic fracturing has greatly impacted shale production, with total numbers increasing more than 7 million barrels a day from 2010 to 2019. Total domestic oil production has increased from 4.4 million barrels per day to 12.2 million.
The Fed also attributed the increase in domestic production to increased consumer spending, as the price of gas at the pump has fallen, allowing Americans more discretionary income to spend elsewhere.