The oil industry packs a bigger economic punch than any other industry in Alaska, according to research findings presented Wednesday at an industry conference in Anchorage.
Study, by McKinley Research Group and commission by Alaska Oil and Gas AssociationIt found that oil and gas employment, spending, tax revenue and spinoff effects supported 16% of the state’s jobs in 2022.
For every direct oil and gas company job, industry activity supports 15 other jobs, and every dollar of oil and gas industry wages supports $4 in wages in other Alaskans, according to the report, which was presented at the Alaska Oil and Gas Association’s annual event. conference.
“This is a significant multiplier. It’s the highest multiplier in the state,” Katie Berry, McKinley’s director of economics and research, said in her presentation at the conference. “And that happens because the oil and gas industry has such a high level of spending and it’s connected to their vendors and connected to the state of Alaska.”
The multiplier What Berry refers to is an economic term that directly accounts for employment and spending, Indirect Costs and Induced Costswhich includes the purchase of industrial workers in the wider economy.
“Every time someone working for an oil and gas company goes to the dentist or pays for child care or stops by Costco, they’re supporting jobs and wages here in Alaska,” Berry said.
The 15 primary oil and gas companies operating in the state employed 4,105 workers, 83% of whom were Alaska residents, and paid $1.1 billion in wages in 2022, Berry said in his presentation. Companies paid $4.6 billion for goods and services in Alaska that year and contributed $4.5 billion in total tax and royalty payments, of which $4.1 billion went to the state government, he said.
That $4.1 billion is 47% of state revenue in the 12 months ending June 30, 2022, he said.
Factoring in all the multipliers, the industry supported 69,250 jobs and was the source of $5.9 billion in wages in 2022, Berry said.
The industry’s large economic impact will continue in the coming years, Berry said in his presentation.
Oil and gas companies collectively plan to spend $14 billion on investments in new fields and existing fields by 2028, a significant amount.
“We feel compelled to remind you that these companies are operating in a global environment where they are competing to bring capital to projects in Alaska. So having this level of investment in the state is very significant,” he said.
Direct construction and drilling employment from the investment is expected to total 1,600 jobs with $1 billion in wages, Berry said. Factoring in the multiplier effect, the investment is expected to support 2,500 to 2,900 workers annually during the construction phase, he said.
Direct employment in the manufacturing phase of these new projects is expected to total 300 jobs and $65 million in wages by 2028, according to the findings. Taking all the multiplier factors into account, according to the results, the cumulative total from new development at the manufacturing stage is expected to be about 2,700 new jobs and $215 million in wages by 2028.
The study is based on state and company data, Berry said.
The new findings were similar to those of the McKinley study Report Released in early 2020 that was also launched by the Alaska Oil and Gas Association. At the time, the company went by a different name: The McDowell Group.
That 2020 study, which focused on impacts in 2018, found a slightly higher level of direct oil and gas company employment: 4,906, of which 84% were Alaska residents. Including all multipliers, the oil and gas industry supported 77,600 jobs in Alaska in 2018, about a quarter of all wage and salary jobs in the state, according to that study.
Alaska Department of Labor and Workforce Development Annual employment forecastIssued in January, it noted that North Slope oil employment is expected to hit a 16-year low in 2021 but will increase this year due to investment in new projects.
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