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Oil and gas were core of Wyoming economy before pandemic, industry report finds
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Oil and gas were core of Wyoming economy before pandemic, industry report finds

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Glenrock Boom (copy)

The sun sets behind an oil pump outside the town of Glenrock on Oct. 14, 2019. A report by the American Petroleum Institute found that 26.3% of Wyoming's 2019 GPD was contributed to directly or indirectly, or induced, by the oil and gas industry.

Before the mass layoffs of 2020, one-sixth of Wyoming’s jobs and more than a quarter of its GDP came from the oil and gas industry.

A report released Tuesday by the American Petroleum Institute found that in 2019, the industry directly supported 28,270 jobs — 6.8% of the state’s total employment. It generated 18% of Wyoming’s GDP and 17.3% of its labor income, including wages, salaries, benefits and proprietors’ income.

Through indirect impacts, which occur along the supply chain, and induced impacts, which come from the spending of industry-related earnings, oil and gas supported another 9.8% of jobs, 8.3% of GDP and 8.3% of labor income in the state.

Nationally, the industry impacted 5.6% of U.S. jobs, 7.9% of GDP and 6.8% of labor income, according to the report.

“Stepping back from those specific numbers, I think what this study tells us is that the oil and natural gas industry will be essential in the post-pandemic recovery,” said Frank Macchiarola, API’s senior vice president of policy, economics and regulatory affairs. “Not just in creating good paying jobs and economic growth, but also in providing for low-cost energy for the American people.”

Wyoming was especially vulnerable to the fuel demand crash caused by COVID-19. In 2019, it had the second-highest share of residents whose employment was impacted significantly by the oil and gas sector — 16.6%, behind Oklahoma’s 16.7% — and the highest proportion of labor income from the industry.

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In total, 26.3% of Wyoming’s 2019 GDP was contributed to directly or indirectly, or induced, by the oil and gas industry — the fourth-highest percentage after Alaska, Louisiana and Oklahoma. And the state’s tax structure is structured around resource extraction.

“If you aggregate all of the tax revenue from oil and gas in 2019, it was $1.67 billion,” said Pete Obermueller, president of the Petroleum Association of Wyoming. “The annual general fund budget in Wyoming is about $3 billion. So one industry sector basically pays for half or more of the state’s general fund.”

Over the last decade, U.S. natural gas production increased by about 60%, while oil production doubled, Macchiarola said. Despite the push by the federal government and a growing number of states to transition to electric vehicles and renewable energy sources, demand for oil is expected to continue rising through 2030, concluded a new report by researchers from Columbia University and the University of California, Davis.

But in 2019, Wyoming saw combined oil and gas production of 369,434,845 barrels of oil equivalent, according to the petroleum association — a 22.4% decline from its 2009 total of 475,782,140 barrels of oil equivalent.

And though, nationally, the oil and gas industry is rapidly nearing 2019 production levels as it recovers from its 2020 slump, Wyoming’s recovery has lagged behind other states.

Obermueller says the Biden administration’s restrictions on leases for new drilling — an executive order, intended to address climate change, that was struck down by a federal judge last month — has had a disproportionate effect on Wyoming.

“The biggest hurdle is that we are highly, highly dependent upon federal government rules and regulations and law, because there’s hardly any hydrocarbons produced in Wyoming that’s not from federal lands or federal minerals,” Obermueller said. “So if you take the universities at their word that we have not reached peak demand, but we have federal policies that do not allow Wyoming to play in the space, that demand is going to be met by Texas, and North Dakota, and China, and Saudi Arabia and other places.”

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