The People of America's Oil and Natural Gas Indusry

Energy Pay Growth and the Regulatory Policies that Fostered It

Mark Green

Mark Green
Posted October 15, 2012

A report by notes data showing that pay increases in the oil and natural gas industry have played a large part in the largest jump in U.S. wages in five years:

"PayScale, which analyzes data from more than 10 million U.S. workers, reported that workers in the mining, oil and gas exploration industry have seen their pay increase by an average of 4.9% over the past 12 months and that has helped to push the average U.S. worker's paycheck 3% higher over the same period. That's the biggest increase since PayScale began monitoring compensation in early 2007."

Here’s a chart that ran with the article:

You can see that the line for workers in energy exploration workers’ pay mostly runs above the one for all U.S. workers. Of course, this reflects what we’ve seen in oil and gas-related job booms in North Dakota, Pennsylvania, Texas and other energy-producing states. It also reflects the shale revolution that has swept parts of the country with technological advances creating access to shale oil and gas resources – abundant and affordable, fueling growth in associated manufacturing sectors, the chemicals sector and supporting areas like housing and transportation, as well.

We wouldn’t be seeing this growth without regulatory decisions that allowed industry and the market to pair the hydraulic fracturing and horizontal drilling techniques that created the shale energy revolution. Rigzone has an article about former Sen. Bennett Johnston, who was behind efforts to loosen some federal regulations that paved the way for the shale boom:

"Before the development of horizontal drilling and refinement of hydraulic fracturing techniques to unlock shale gas deposits came the incentive to do so. The allure of exploiting shale gas largely has stemmed from a deregulated marketplace in which market forces, rather than government price controls, set the wellhead price of natural gas. J. Bennett Johnston was instrumental in changing the competitive landscape for producers, shippers and users of the fossil fuel more than three decades ago. 'Look, shale gas is a revolution in America,' Johnston recently told Rigzone from his office in Washington, D.C."

The story notes the Natural Gas Policy Act of 1978 gradually eliminated natural gas price ceilings, providing incentive for companies to pursue new development. It also allowed pipelines more freedom to sell and transport gas without prior federal approval, expanding markets. Other legislation incentivized deep water oil and natural gas exploration and development.

The point here is that the oil and natural gas pay increases – reflecting greater industry activity and greater resource development – that are driving overall U.S. wage growth, stem from more drilling that has been possible because the regulatory environment fostered it. Industry has grown, despite a weak economy, and can do more with common sense regulation as well as policies<link> to encourage more safe and responsible drilling.


Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.