The People of America's Oil and Natural Gas Indusry

Our Promising Energy Present and Future

Mark Green

Mark Green
Posted September 4, 2013

You’ve heard about the U.S. shale energy revolution. Now a  new study from IHS quantifies the revolution’s breadth, depth and future promise, one that could see major oil and natural gas industry job creation stemming from development of unconventional reserves as well as billions of dollars in economic stimulus, manufacturing sector expansion and significant new revenues for governments at all levels. Needed: the policies to sustain and build on that revolution.

Standing out in the IHS report, which accounts for all value chains supplied by unconventional oil and natural gas reserves (unlocked by hydraulic fracturing and horizontal drilling) and analyzes future impacts with continued development:


  • Jobs – 3.3 million jobs by 2020 (up from 2.1 million in 2012) supported by the full unconventional value chain – including upstream, midstream and downstream oil and natural gas industry sectors and energy-related chemical industries. IHS says the total could reach nearly 3.9 million jobs by 2025.

  • Household income – Increase in real disposable income to the average American household of more than $2,700 in 2020 and $3,500 by 2025, from lower energy costs and lower costs for all goods and services due to development of unconventional oil and natural gas.

  • Investments – Nearly $346 billion in cumulative capital investments by energy companies across the full unconventional value chain between 2012 and 2025.

  • Revenues to governments – More than $125 billion in annual federal and state tax revenues generated by 2020 and $138 billion by 2025 (up from $75 billion in 2012).

  • GDP – More than $468 billion in annual contributions to U.S. GDP by 2020.

IHS’ John Larson, vice president for economics and public sector consulting, during a conference call Wednesday:

“For many Americans, particularly those not in supply chain, the unconventional revolution, talk about trade, government revenues and jobs can prove somewhat abstract. However, our analysis found that the impacts are not abstract but real and tangible. … There are truly profound income effects that are being felt in the country as a result of this unconventional (energy) revolution.”

Affordable, abundant American energy is literally fueling a resurgent U.S. manufacturing sector and will continue doing so given the right policies. The report:

Our analysis demonstrates that this manufacturing renaissance will increase industrial production by 3.5% by the end of this decade and by 3.9% by 2025. Output by the manufacturing sector will increase by $258 billion in 2020 and $328 billion in 2025. The US competitive advantage is particularly pronounced in energy-intensive industries, such as energy-related chemicals which in the coming years will be a primary beneficiary of lower prices for energy and feedstock.

More on manufacturing:

 Industries such as organic chemicals, resins, agricultural chemicals, petroleum refining, metals such as iron and steel, and machinery are among the top-ranked sectors benefiting from this revolution. These sectors are expected to benefit from lower energy prices (for those that use oil and natural gas as feedstocks), lower electricity prices, and increased demand for their products as growth in overall GDP spurs domestic consumption.


IHS says increased U.S. industrial production and product exports will improve the United States’ trade position. The unconventional energy revolution will “increase steadily through 2022, before plateauing at a new, higher level of $180 billion per year in additional real net trade that is above what would occur in a US trade regime that had excluded this new unconventional activity.”

There’s more, and future posts will delve into some of the details. But the projected benefits of unconventional oil and natural gas are contingent on energy policies that allow continued development growth. IHS cautions:

Production could be lower if regulatory or legislative changes are made to restrict unconventional oil and natural gas activity. This is particularly true despite the fact that the vast majority of this activity currently takes place on non-federal lands. Regulation at any level of oversight – by federal, state or local governments – has the potential to fundamentally alter the breakeven economics of extraction, pace of development, or access to these energy resources.

These are stunning numbers – numbers that could grow with greater access to U.S. reserves onshore and offshore, with streamlined leasing and permitting processes and with tax and other policies that encourage investment. Kyle Isakower, API vice president for policy and economic analysis:

“Unconventional energy has been a remarkable economic stimulus with implications far beyond oil and natural gas producing state. New supplies are changing the game for businesses that use or make energy-intensive products including chemicals, aluminum, steel, cement, and foodstuff.  But to unlock our full manufacturing potential, those in Washington must turn aside efforts that would impose duplicative regulations on shale development, raise production costs, and limit access to domestic resources.”

IHS presents a promising U.S. energy future rising from vast shale and other tight-rock oil and natural gas reserves. Promising – provided we make the right energy choices.


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.