Oil & Natural Gas Study Shows Industry Responsible for $65.7 Billion of Total State Economic Output
Independent reappraisal determines current tax policy is critical to future state growth
Oklahoma City (September 21, 2016) – The importance of the oil and natural gas industry in Oklahoma has been reaffirmed through an updated report. The study, “Economic Impact of the Oil & Gas Industry on Oklahoma,” shows that almost 150,000 Oklahomans earned $15.6 billion in wages or self-employment income from oil and natural gas activity in 2015, and that public education received $331 million in oil and gas severance tax revenue.
Activity in the industry supports an estimated $28.6 billion in additional spillover output of goods and services in other industry sectors statewide, according to the report. This means that approximately 27% of total state household earnings are supported by the energy sector.
“Looking at both the economic and tax revenue impact of the oil and natural gas industry, we can see that this sector continues to make a huge contribution to Oklahoma,” said Fred Morgan, president and CEO of the State Chamber of Oklahoma. “As the report update clearly demonstrates, even with the drastic price reductions we’ve seen in the past couple of years, oil and natural gas is still the most important contributor to economic growth in Oklahoma.”
The report finds that oil and natural gas income gains have pushed state per capita income to 95% of the U.S. average in recent years. It also determined that in 2015 the industry spent $10 billion to complete an estimated 1,822 wells in Oklahoma at a cost of $5.46 million per well. Over the past five years, according to the report, drilling expenditures in Oklahoma totaled an estimated $61 billion, or an average of $12.2 billion annually.
“For policymakers, the volatile and ever-changing environment for oil and natural gas makes balancing the need for tax revenue with the desire to foster growth in the state’s trademark industry more challenging than ever,” said Dr. Mark Snead, economist and president of RegionTrack, who authored the study. “The oil and natural gas industry remains the largest single source of state tax revenue, and important shifts have taken place in the types and amounts of taxes paid by the industry. The channels of economic influence on the state economy have also changed, as ownership and investment in the industry are now as important as employment and wages as a source of economic stimulus.”
This study was first conducted two-and-a-half years ago, but an updated version was prepared for the State Chamber of Oklahoma in response to the extreme slide in prices and resulting revenue loss to the state. The earlier study, “Economic Assessment of Oil & Gas Tax Policy in Oklahoma”, was prepared by RegionTrack, an Oklahoma City-based economic research firm specializing in regional economic forecasting and analysis. They also prepared the update.
The study and executive summary can be viewed online at the State Chamber Research Foundation website.
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About the State Chamber of Oklahoma
Representing more than 1,500 Oklahoma businesses and 350,000 employees, the State Chamber of Oklahoma has been the state’s leading advocate for business since 1926. For more information, visit www.okstatechamber.com.