The People of America's Oil and Natural Gas Indusry

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Kyle Isakower

Kyle Isakower
Posted October 21, 2011

Not content with a blog post yesterday on the topic of energy and jobs (get caught up here), Paul Krugman doubles-down on wrong today with a column in the NY Times on Republican candidates using API's job creation study.

"Mr. Perry has put out a specific number -- 1.2 million jobs -- that appears to be based on a study released by the American Petroleum Institute, a trade association, claiming favorable employment effects from removing restrictions on oil and gas extraction."

Really don't care about the politics, we will let the politicians have their fun, but since he does characterize our study as calling for "removing restrictions on oil and gas extraction," let's look at that part. Here are the policy and regulatory assumptions the study presented as its Development Policy Case path:

• Opening of Federal areas that are currently "off limits" to exploration and development

• Lifting of drilling moratorium in New York State
• Increased rate of permitting in the offshore Gulf of Mexico
• Approval of the Keystone XL and other future Canada to U.S. oil pipelines
• Regulation of shale resources remains predominately at the state level
• Permitting levels are at sufficient rates to develop resources in a timely manner

Ok. Now back to Krugman:

But does this oil-industry-backed study actually make a serious case for weaker environmental protection as a job-creation strategy? No.

Whoa, wait, what? A job-creation strategy based on weaker environmental protection? Where exactly is that in the study? Nowhere. This isn't even some clever argument, this is outright wrong.

As journalists were reporting yesterday, the oil and natural gas industry is the largest investor in GHG-reducing technologies, more than the federal government, and almost as much as all other investors combined.

And, of course, Krugman goes on ...

Part of the problem is that the study relies heavily on an assumed "multiplier" effect, in which every new job in energy leads indirectly to the creation of 2.5 jobs elsewhere...

Obviously some Big Oil shenanigans with this "multiplier" effect, right? I mean he put "multiplier" in quotes, so you know it must be some fake Corporation thing, right? Well, I'm sure the Krugman-friendly Economic Policy Institute will blast that 2.5 "multiplier" right out of the water in one of their studies...oh wait, they use 2.5 too.

Well, they are a bit of a political shop, how about an academic, perhaps from Berkeley, say Enrico Moretti: "Adding one additional skilled job in the tradable sector generates 2.5 jobs in local goods and services."

Back to Krugman:

All the big numbers in the report are projections for late this decade. The report predicts fewer than 200,000 jobs next year, and fewer than 700,000 even by 2015. You might want to compare these numbers with a couple of other numbers: the 14 million Americans currently unemployed, and the one million to two million jobs that independent estimates suggest the Obama plan would create, not in the distant future, but in 2012.

(Sidenote: Those independent estimates? Yeah, they use multipliers too.)

Now we are really deep in the odd, the dismissal of 200,000 private-sector jobs in 2012. I feel like I "might want to compare" that with some other numbers, actually just one other number, from the Bureau of Labor Statistics: 72,000. As in "Since April, payroll employment has increased by an average of 72,000 per month..." So let's see, 200,000 jobs, would be, hmmm, three months of job growth. An entire bonus quarter of job growth!

And how much would this bonus quarter of American jobs cost the taxpayer? Nada, zilch, nothing. In fact increased access, with no weakened environmental protections, will actually increase revenue for the federal government. Pretty good deal right?

And one more thing. These jobs, while not the grand quick-fix million in 2012 Krugman is impressed with, they also aren't...temporary. At the end of 2012, when the borrowed money runs out, they won't fade away putting workers back onto the unemployment rolls. These jobs will keep producing, and growing, and adding more American jobs in 2013, and more American jobs in 2014, and more American jobs in 2015.

Those are some numbers we can count on.


Kyle Isakower is vice president of regulatory and economic policy at the American Petroleum Institute. With 26 years experience, he is the go-to guy for issues regarding energy and environmental policy and oversees the development of API standards and economic analyses. In his past lives, Kyle has worked on issues related to waste management and remediation, NAAQS and air toxics—and led efforts promote the industry's energy efficiency efforts. Transplanted to Washington from north Jersey over 20 years ago, he remains faithful to the New York Giants, and works diligently to ensure his wife and two children do so as well.