It is impossible to imagine the modern world without energy. People got used to live in warm houses, the greatest plants work on the basis of the products oil and gas industry supplies them with. This high demand on energy in different forms makes it impossible for the modern economy function without it. Oil and gas industry is considered to be the most impacting in the whole world as well as in the USA.
The main purpose of the research is to consider how oil and gas industry affects the economy of the country. It is important to understand that the financial value of the industry is not the only an issue which is considered to be influential at the financial market, labor market is also affected at great extend.
The general impact of the oil and gas industry may be divided into three main measures, direct impact, indirect impact, and induced impact. Direct impact is understood as the jobs and added value which are considered within the industry. Indirect impact is followed within the industries which deal with the products offered by the oil and gas industry. Induced impact is considered as the use of the income resulted from the oil and gas industry. Almost each country in the world deals with this industry and it is possible to say that the impact of this industry is great (“The Economic Impacts” 9). It is crucial to consider the financial importance and the significance of the industry as the employee in detail.
Dwelling upon the impact of the oil and gas industry on the economy of the country, business sector cannot be omitted. The great impact of the industry on business may be explained as follows, the industry spends money which is further spent by local businesses and recipient employees; then businessmen purchase different goods and hire employees who get salaries and spend them on state economy. This is an indirect impact of the oil and gas industry on the USA economy (“The Economic Impacts” 14).
The demand on the products manufactured in the industry has been increasing from year to year. With the rise of the prices on the oil and gas, capital investments increased as well. This influenced the level of revenue in the industry and the rate of taxes the industry pays to the national treasury.
The production of the crude oil in 2005 was valued at $45.2 billion. The increase of the natural gas production is measured by the increase on 312% from 1997. The export of gas and oil brought the country value at $45.2 billion in 2006. The contribution to the gross domestic product in 2005 was about $5.1 billion (Williams 9).
The impact of the considering industry on the labor market in the whole world and in the USA is crucial. More than 7.8 million employees were involved in the oil and gas industry in the USA, according to the information collected in 2007. If to pay attention to the total employment contribution to the national economy, including the related jobs, the industry managed to provide 9.2 million employees in 2007. This is 5.7% of the whole employment in the USA (Pennsylvania Economy League of Southwestern Pennsylvania 3).
Apart from the creation of the job places within the industry, the “oil and gas industry creates jobs in related industries” (Pennsylvania Economy League of Southwestern Pennsylvania 14).
Moreover, the same report states that due to the direct impact of the industry 10,538 employees have the jobs in the industry, 5,260 employees work in the related spheres and 10,761 employers are related to the industry by means of the induced impact (Pennsylvania Economy League of Southwestern Pennsylvania 16). These results are considered only for Pennsylvania and it is may be easy to predict he results for the whole country.
Thus, it may be concluded that the impact of the oil and gas industry on the country and world economy is crucial, especially if to take into account the rapid growth of the industry. Moreover, there is a tendency that more and more companies and even the whole countries become dependent on oil. It becomes not only the product, but the method for payment. The country which exports more oil and gas industry’s products is the most powerful one and can influence the price formation in the industry.
The labor and financial markets are influenced by the industry in both direct and indirect ways. Many companies have created business on the basis of the products and services produced within this industry. Many people work in the sphere, even if there is no oil and gas manufacture in the country. Many indirect job places are created on the basis of this industry.
“The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy: Employment, Labor Income and Value Added.” Price Waterhouse Coopers 8 September, 2009. Print.
Pennsylvania Economy League of Southwestern Pennsylvania. “The Economic Impact of the Oil and Gas Industry in Pennsylvania.” Pennsylvania Economy League November, 2008. Print.
Williams, Cara. “Fuelling the economy.” Perspectives on labor and income 8(5): 2007, p. 9. Print.