American Petroleum Institute touts oil, gas industrys importance to Colorado economy

A new report by a national industry group that says oil and gas development supports hundreds of thousands jobs in Colorado arrives amid robust discussions on the economic recovery and energy future of the state and nation.

The report released Tuesday by the American Petroleum Institute said oil and gas supported 69,000 direct jobs and 271,000 indirect jobs in Colorado in 2019, which is the latest data available. Nationally, the report found the industry supported 2.5 million direct jobs and 8.8 million indirect jobs, 5.6% of the total U.S. jobs.

The report’s findings on the industry’s economic contributions are important as the country rebounds from the pandemic and considers energy policies, said Frank Macchiarola,API’s senior vice president of policy, economics and regulatory affairs.

However, an analyst with an institute that supports a diverse energy economy, questioned whether some of the report’s numbers are inflated. The report lacks transparency, said Tom Sanzillo, director of financial analysis for the Institute for Energy Economics and Financial Analysis.

“This is an industry that is big and powerful and does provide a major contribution to the country’s economy. It doesn’t have to stretch it in order to make its point,” Sanzillo said.

But API said the report, prepared by PricewaterhouseCoopers, takes in oil and gas jobs across the industry, including pipeline operations and oil refining, which are included in different sectors in some government statistics. Macchiarola said the report, which API releases annually, draws from data by the U.S. Bureau of Economic Analysis in the Commerce Department and is supplemented by other data sources.

The BEA figures capture the people who are self-employed in the industry and individual partnerships, Macchiarola said, whereas the U.S. Bureau of Labor Statistics captures just the salaried employees.

Sanzillo said the report’s methodology isn’t clear, adding that more than 800,000 of the employees cited in the report work in gas stations and convenience stores. “Many of these convenience stores now host charging stations for (electric vehicles). Are they part of the solar and wind industry also?”

The facts on job numbers and the state of industry matter because of the public debate over the use of fossil fuels, Sanzillo said. The trade group defended the report’s contents

“Service station workers are naturally included in these figures, as they represent an important part of the supply chain for liquid fuels and are by far the most visible part of our industry to the general public,” Lynn Granger, Colorado-API executive director, said in an email.

After factoring in wages, additional jobs supported by the industry and “induced impacts,” or personal spending by employees and business owners, oil and gas contributed $46.1 billion to Colorado’s gross domestic product, or 11.7%, in 2019, according to the report. Nationally, the industry’s impact was nearly $1.7 trillion of the GDP, or 7.9% of the total, the report said.

“The average wage in our industry is nearly double the private sector average wage in the U.S., so it’s not just the size of the job but quality of the job that the industry supports,” Macchiarola said. “At a time when policy makers are considering a broad range of policies that will impact the industry, it’s important to take stock of what’s at stake.”

The demand for oil and gas is near pre-pandemic levels, Macchiarola said, and experts believe the fuels will be used for decades to come.

At the state and federal levels, policy makers are addressing climate change by reducing greenhouse-gas emissions, which oil and gas contribute to, and expanding the use of renewable energy. A $1.2 trillion bipartisan infrastructure bill in Congress includes billions of dollars to boost the number of electric vehicles on the roads and upgrade the electric grid to facilitate more renewable energy.

In Colorado, lawmakers have set goals for cutting emissions and recently passed several bills aimed at electrifying transportation and buildings in the state. State regulators have written new rules on reducing methane emissions from oil and gas sites as part of a 2019 law that overhauled how the industry is regulated.

Any discussion of the oil and gas industry’s impacts should include what the continued use of fossil fuels means for the environment, said Pete Kolbenschlag of Paonia, a consultant and longtime activist on climate change, energy and conservation.

“We can look at central Europe and the wildfires across the West to judge whether the economic benefit that the oil and gas industry brings can meet the cost now being levied by its carbon footprint,” Kolbenschlag said in an email.

“The federal government announced it is lowering Blue Mesa Reservoir — Colorado’s largest — by 8 feet to send more water to the rapidly disappearing Lake Powell. These are the impacts from climate change today, already costing us billions, and API has long known its products are a leading cause of this crisis,” Kolbenschlag added.

Macchiarola said API issued a climate action plan in March that supports federal funding to develop new technologies to cut carbon emissions and fast-track commercial systems to capture and store carbon and encourages innovation by companies. The organization endorses placing a price on carbon and supports the direct regulation of methane emissions from new and existing sources.

Granger of Colorado-API said the industry is a key partner in tackling environmental concerns.

“Colorado has some of the most aggressive policies and emission reduction goals in the nation. We have long held that we’re part of the solution on all those fronts,” she said.

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