Energy Jobs: Fueling the Overall Economy

The oil and gas multiplier effect in 2011 was 6.9 jobs, according to the U.S. Bureau of Economic Analysis. That means that when someone was hired in the oil and gas industry that year, an additional 5.9 jobs were indirectly created or induced in the economy. That same year, the World Economic Forum came up with a more conservative multiplier figure of 4.

Ingham puts the current multiplier effect somewhere in the middle.

“What is a good number? I feel comfortable going with 5. If you say, for example, that 10,000 jobs were directly created in the oil and gas industry in a calendar year, then we can surmise that in addition to those 10,000 jobs, there were another 40,000 jobs created as a direct or induced result of that activity in the creation of the original 10,000 jobs. I don’t think you would get much argument with a number of 5, and if anything, it’s probably a little bit conservative. The actual figure could be just a little higher,” Ingham told Rigzone.

Even among those who disagree over what the multiplier may be, there is no doubt among the economic and business communities that a multiplier effect of some magnitude does exist, Ingham noted.

“So, once you acknowledge that there is a multiplier effect, and that this ripple effect does exist, then it’s just a matter of trying to glean what the number is. Anything less than 5, I think, is low,” he said.

Most other jobs, such as retail sales jobs, have a less robust multiplier effect on the economy, Ingham said.

“They just don’t pack quite the punch that a higher-paying job does,” he said. “It’s not just the payroll itself, though. There are other things, like what their supply chain looks like, that also affect the size of the multiplier. But payroll obviously has a fair amount to do with it.”


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