New Report: Texas Energy Delivered Positive Impacts For Texas Economy

Tue, February 07, 2023

The Texas Independent Producers and Royalty Owners Association (TIPRO) released its eighth edition of its “2023 State of Energy Report,” which examines the economic impact of the oil and natural gas industry on employment, wages, payroll, businesses and production in 2022.

This past year, the industry, like many others was faced with difficult challenges – from supply chain shortages to inflation. Despite those challenges, the Texas industry managed to thrive.

Texas oil and gas has a tremendous impact on the Texas economy.

TIPRO reported that the total direct Gross Regional Product (GRP) for the Texas oil and natural gas industry was $323 billion, or 16 percent of the Texas economy in 2022. In taxes and state royalty payments alone, Texas oil and natural gas industry paid $24.7 billion. These taxes primarily support two critical funds in the state: the Economic Stabilization Fund (Rainy Day Fund) and State Highway Fund. These funds support Texas schools, teacher’s pensions and roadways.

In fact, the industry was able to support 40 percent of Texas’ economy last year – which is no surprise, given the oil and gas industry purchased $264 billion in U.S. goods and services, 82 percent from Texas businesses.

Beyond the billions of dollars that flowed into the state economy, the Texas oil and gas industry also influenced employment in the state. In 2022, Texas led the nation in oil and gas sector employment (347,828 direct jobs), accounting for 37 percent of all oil and gas jobs in the country. These jobs are also well-paying, with an annual average wage of $139,061 which is 103 percent more than the average private sector wage.

TIPRO’s analysis on employment numbers aligns with a recent December survey by the Federal Reserve Bank of Dallas, which found employment in the nations’ oil field services sector continues to rise as companies are competing for workers in a tight labor market.

Moreover, the Fed survey indicated that almost two-thirds of oil and natural gas executives reported an increase in capital spending in 2022 compared to a year earlier. These same executives are anticipating to also increase spending in 2023. With industry executives planning to spend more on the industry, Texans working in the sector and the Texas economy are likely to experience increased growth for the second consecutive year. More spending in the state means more revenue for Texas businesses, more jobs, and more economic stability.

Even as Texas production rises, emissions fall.

The innovation that has delivered more jobs, higher wages and positive economic benefits has also enabled Texas to reduce its emissions footprint while breaking production records.

In 2022, Texas was the nation’s top oil producer, supplying 1.83 billion barrels to the energy markets. Texas also led the United States in natural gas production, producing 11.2 trillion cubic feet (Tcf) of natural gas, and this number is only expected to grow this year. In December of 2022, the Energy Information Administration’s (EIA) Short-Term Energy Outlook raised the 2023 forecast for increased domestic natural gas production, which was directly impacted by the output from the Permian Basin.

In 2022, the Permian Basin region was one of the most prolific oil and gas basins in the United States. The successful production year in the region was also coupled with emissions reductions. In 2022, methane emissions intensity was cut by more than 40 percent from 2016 at all operated assets. Exxon’s elimination of routine flaring from all their assets in the Permian is a key example of balancing increased production and emissions reductions.

This trend has extended well beyond the past year. Texans for Natural Gas released a report which found that between 2011 and 2021, methane emissions intensity in the Permian Basin fell more than 76 percent, while production increased over 345 percent during that same period. And Texas alone was able to reduce its flaring intensity by 60 percent, between 2020 to 2021.

The oil and gas industry is critical for the future of both Texas and America. 

The economic numbers are staggering; when incorporating direct, indirect, and induced multipliers for employment at the national level, the industry supported more than 19 million jobs last year, and payroll in the U.S. oil and gas industry totaled $114 billion.

Embracing oil and gas is embracing a secure energy future. And, as Ed Longanecker, president of TIPRO and spokesperson for TNG noted: “The Texas oil and natural gas industry remains a cornerstone of our state economy and a critical source of energy security for our country and allies abroad.” 

The complete report from TIPRO can be found here.