Gas and Oil Re-Invest Tax Windfall
By David Williams
President Trump’s recent tax overhaul has American CEOs feeling generous. Walmart and American Airlines are among the big companies giving employees bonuses of up to $1,000 each; Lockheed Martin is putting an additional $5 million toward employee pensions, and Cigna is upping its hourly minimum wage to $16.
Some pundits are accusing the energy industry of failure to follow suit. People are asking where the bonus announcements from big oil and gas companies are.
That’s an easy question to answer. The fact is that for energy firms, job creation and above average salaries are already the norm. Under the new tax law, oil and gas firms have drawn up plans to use new revenue from the tax bill to invest in projects that will spur new employment and keep energy bills low.
Even before the tax overhaul, energy firms were providing their employees with above average wages. The average worker in the oil and gas industry currently earns more than $96,000 annually — nearly $50,000 more than the overall U.S. average.
Oil and gas employers have also been creating American job opportunities. According to a study from IHS, a leading research firm, the industry will support 1.9 million new nationwide jobs by 2035. African Americans and Hispanic Americans will fill nearly 40 percent of those jobs.
Millennials, a group that too often gets stuck in the “gig economy,” will fill these jobs too. Already, one in three positions in the oil and natural gas sector is filled by a millennial.
Thanks in part to tax reform, the oil and gas industry is poised to invest as much as $1.34 trillion in infrastructure through 2035. These investments will be on pipelines, refineries, equipment, and processing and storage facilities. Such an investment would contribute $1.89 trillion to America’s gross domestic product and support more than 1 million new jobs every year. Additional investments in pipelines alone could support more than 830,000 jobs through 2025.
For many of the tough years of the financial crisis and Great Recession, American jobs basically flatlined. From 2007 through 2013, the truly bright sector of the economy for job creation was in extraction of oil and gas, growing nearly 40 percent. While industry employment took a tumble with the sharp decline in oil prices in 2014-15, by 2017 employment was bouncing back.
The economic benefits of energy investments extend to the whole nation. In an economic chain reaction, manufacturing states like Ohio, New York and Illinois ramp up the assembly of steel, cement and other commodities necessary for energy development.
As energy production ramps up, an abundance of natural gas and oil across the country means lower home energy bills and cheaper prices at the pump. Natural gas is the least expensive means for Americans to heat their homes. In 2015, lower home energy rates due to increased lifted average U.S. disposable income by $1,337 per household. By 2025, that figure could reach $3,500.
Those claiming the gas and oil companies are selfishly hoarding the perks of a favorable new tax law are the same voices that have consistently opposed more exploration and ramped-up domestic production through such technological advances as fracking. More than ever, as the United States becomes the world’s No. 1 producer of oil and gas, energy is the backbone of a thriving U.S. economy. Tax reform will be the catalyst to allow the United States keep its position as global leader.
David Williams is president of the Taxpayers Protection Alliance.