Natural Gas and Job Creation

Mark Green
Posted October 26, 2011

In an op-ed for the Wall Street Journal [subscription required], ConocoPhillips Chairman and CEO James Mulva notes some familiar statistics: 9.1 percent national unemployment, 16.5 percent when you count people who have accepted part-time work or have given up looking altogether. There is a jobs answer, Mulva writes: natural gas.

The natural gas numbers: 600,000 Americans already employed developing, storing and transporting this abundant, clean-burning fuel. That includes 140,000 jobs in Pennsylvania's Marcellus Shale region and 100,000 jobs created in Texas' Barnett Shale field since the mid-1990s, with another 68,000 projected in the Eagle Ford play by 2020.

Note the pattern: Producing natural gas from shale in these states, North Dakota and others is creating regional zones of dynamic economic growth - further evidenced by the 2.2 million jobs nationwide supported indirectly by the incomes of natural gas workers or companies that service the industry. That's right, the "multiplier" effect. Real jobs, real paychecks.

So, America needs more jobs, and the oil and natural gas industry is creating them, especially in the natural gas regions detailed by Mulva. It's job growth that's repeatable and sustainable and, as he writes, doesn't need government subsidy. Mulva:

"Natural gas and shale gas heat homes, schools and factories, generate electricity and serve as feedstock in plastics, chemicals and fertilizer. They are familiar, safe and affordable. Abundant reserves--North America has an estimated 100-plus year supply, according to the Department of Energy--mean natural gas prices will remain reasonable, giving energy-dependent American manufacturers an edge in competing for global business."

How to unlock natural gas' potential? Mulva outlines three keys:

• Taxes: "Governments must stop singling out the oil and natural gas industry for tax increases. Its effective global tax rates already far exceed those of other industries."

• Regulation: "When considering new natural gas regulations, government should first assess the adequacy and enforcement of the thousands of existing federal, state and local regulations that already govern production. Duplicative or conflicting requirements add little protection but needlessly increase costs and further stifle the economy."

• New development: "Government must open new areas to exploration, while ensuring sound environmental stewardship."

• Mandates: "Although all energy sources are needed, government mandates that force electric utilities to use renewable energy sources such as wind and solar are mistaken. Such sources are generally uncompetitive, requiring subsidies that increase costs to consumers. Further, by crowding out cleaner-burning natural gas, the mandates may not achieve significant reductions in greenhouse gas emissions. Rather than favoring particular technologies, governments should focus exclusively on setting environmental objectives and allow markets to innovate and select the most environmentally and economically effective sources based on their merits."

Industry bear specific obligations, Mulva writes:

"The natural gas industry itself must meet the highest environmental and safety performance standards. It must demonstrate that its time-tested and proven drilling techniques pose little threat to groundwater and air quality. Additionally, the industry must demystify its work by better explaining to the public how we find and develop natural gas, our techniques and safeguards, the potential that natural gas represents for the country, and what steps regulatory authorities should take to help capture that potential for consumers."

Energy and jobs. America's oil and natural gas companies and communities across the country are showing the dynamic link between the two.