Louisiana and the Benefits of Embracing Energy

Mark Green
Posted July 17, 2014

We like to bring attention to good-news energy stories from states like North Dakota (also here) because the oil and natural gas development there is creating good-paying jobs for Americans, generating opportunity and lifting economies. The great news is that the benefits from the U.S. energy revolution are being felt in a number of places.

A new study shows the tremendous positive impacts of energy development in Louisiana, the nation’s No. 2 crude oil producer at nearly 1.45 million barrels per day when federal offshore production is included, and No. 2 in petroleum refining capacity.

The quick story: Louisiana has embraced oil and natural gas development,  and oil and natural gas development has embraced Louisiana – with jobs, economic stimulus and revenues for state and local governments. This is clear from the study of the state impact of the oil and natural gas extraction, refining and pipeline industries by economist Loren C. Scott:

• $73.8 billion in sales to state firms supported in 2011 (most recent data year)
• 287,008 jobs supported in 2011. For every job created in the three sectors, 3.4 additional jobs are created in other sectors in the state.
• $20.5 billion in household earnings for Louisianans in 2011, 11.6 percent of total earnings in the state)
• $1.5 billion in state taxes and fees directly paid by the industries in fiscal year 2013, or about 14.6 percent of total state taxes, licenses and fees collected.
• $1.43 billion in taxes indirectly collected from household earnings – for a total boost to the state treasury of $2.9 billion.
• $1.3 billion contributed to local government treasuries in 2013, including $410 million in ad valorem taxes paid directly by the three industries to local governments – an increase of 37.5 percent over 2009 – and more than $900 million indirectly to local treasuries from household earnings.
• Nearly $5.9 billion in wages paid by the three industries for Louisiana households n 2013 – equal to 7.2 percent of total covered wages in the state that year.

The benefits here are a result of geology – Louisiana sits on top of significant shale energy plays and has long been a center of U.S. offshore energy activity – and a pro-energy approach by the state that includes strong workforce and economic development agencies, expedited permitting options, pro-investment tax policies and incentives to companies that create well-paying jobs and promote economic development – like energy companies. From the Scott study:

In the world of economics, some states have only weak engines for economic growth. … Other states, either because of the sheer luck of the draw in resource distribution and/or because of innovative development policies, have attracted industries that are veritable dynamos of energy – creating high-wage jobs and spillover business for all kinds of firms. These states not only enjoy the benefits of healthy jobs and income, but also state and local government treasuries get a boost from taxes and fees these industries generate both directly and indirectly.

Comments from Scott on the study:

Oil and natural gas “is the engine that makes the difference. For Louisiana, the presence of the extraction, refining and pipeline industries have indeed made all the difference. The energy industry, and its accompanying multiplier effects, has been a powerful engine for economic growth in Louisiana.”

Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, which partnered with the Grow Louisiana Coalition to sponsor the Scott study:

“From the exploration and production and service companies who find and produce needed natural resources, to the pipeline companies who transport the production and products, to the refineries who transform the production into usable material, the industry makes life easier. The energy industry has been a responsible community partner for more than a century, creating more jobs than any other industry in Louisiana, raising the standard of living and quality of life all across the state.”

Louisiana’s energy story – like those in North Dakota, Texas, Pennsylvania, Ohio, Colorado and other states – is one of safe and responsible development capitalizing on vast reserves, largely through advanced hydraulic fracturing and horizontal drilling. These energy stories are replete with jobs that can support and lift families, communities – and entire states. It’s underwritten by pro-growth public policies that foster investment and development.

Louisiana’s energy story is why America should choose energy, now and in the future.