Information on Oil and Gas contributions to Jobs, Taxes and Royalties

High-Quality, High-Paying Jobs

Oil and gas companies employ more than 315,000 Texans in high-quality, high-paying jobs. Average annual income for an oil and gas employee is about $97,000. By comparison, average annual income for workers at other private sector firms is about $44,000. 

Oil and Gas Job Multiplier Effect

Each oil and gas job represents capital projects and other significant expenditures, to which companies commit large sums of money. These projects procure equipment and services from a variety of other firms. Therefore, it is not an exaggeration to say that each oil and gas job can lead to the creation of many other jobs in Texas. According to some industry estimates, this multiplier effect can be as high as 14 to 17 additional jobs created for each oil and gas job, in certain categories. Overall, at a minimum, every oil and gas job creates three more additional jobs. Helping to create this multiplier effect are oil and gas company purchases for everything from equipment to land, pipe, materials (including steel and concrete), fuel, construction, well services and maintenance, and engineering, legal and accounting services.

Grasping the Scale of Oil & Gas Investment in Texas

According to the office of Texas Comptroller of Public Accounts Susan Combs, oil and gas firms have invested in the state, more than the equivalent of building a new, $1.2 billion Cowboys Stadium every month. During FY 2009, the amount spent on high-cost gas drilling was $15.2 billion, or slightly more than a new stadium per month. This was six times greater than expenditures on activity during FY 2000.

Taxes paid support state/local governments and schools

During Fiscal Year 2009, the oil and gas industry paid more than $8.5 billion in Texas state and local taxes, and royalties. The taxes paid go toward funding Texas schools, textbooks, Medicaid, children’s health insurance programs, children's protective services, roads, and police and fire departments. The term, oil and gas industry, refers to exploration, drilling and production; oilfield equipment manufacturing;, pipelines; natural gas distribution; refining; petrochemicals; and petroleum product wholesaling.

On a per-employee basis, oil and gas companies pay much more in state and local taxes and royalties than do most other private sector firms. In FY 2009, oil and gas companies paid, on average, roughly $24,000 per job in state and local taxes, and approx. $2,600 per job in royalties. By comparison, other private sector firms paid, on average, only about $4,800 per worker. In other words, oil and gas companies paid 5 time more in state and local taxes, and royalties, than other private sector companies, on a per-employee basis. This major difference shows the disproportionately important role that oil and gas play in supporting the Texas economy and Texas government.

Sources: Texas Workforce Commission, Tax and Fiscal Consulting (Austin, TX), and
Office of Texas Comptroller of Public Accounts.

Oil & Gas Contributions to Economic Stabilization Fund

Established in 1988, the Economic Stabilization Fund (ESF, a.k.a. "Rainy Day Fund") is maintained by Texas officials for "special emergencies" (as in natural disasters or large budgetary shortfalls). The vast majority of the ESF is funded by oil and gas taxes. In FY 2009, there was a record $2.2-billion transfer to ESF, all of which came from oil and gas taxes. The ESF has been used to help close budget shortfalls, provide property tax relief, supplement public schools; and fund a variety of other social services.  The Texas Comptroller estimates that a total of $8.1 billion will be in the ESF by the end of the current budget period. Additional taxes to be paid by oil and gas companies in the subsequent budget period (fiscal 2012-13) could further benefit the fund and state programs financed by it.

Local Budgets Supported by Bonuses, Royalties & Taxes

Additional revenue from oil and gas bonuses, royalties and taxes is helping local governments in North Texas balance their budgets, as revenue from sales taxes, building permits and property taxes declines. At last count, there were nearly 420,000 royalty owners in Texas. 

Here are some examples, as cited in an August 2010 article in The Dallas Morning News:

In Dallas, officials are looking at how drilling could provide income to compensate for a 4.3% drop in property valuations. They have approved several specific-use permits on the city's western side.

In 2007, Arlington formed the Arlington Tomorrow Foundation (ATF), which provides grants to charities, cultural organizations and city programs. It was created in 2007 using 90% of the signing bonus from a lease agreement to drill on city-owned property. ATF has been permanently endowed with 50% of royalties from that lease. The remaing 50% go into the city's general fund. 

The city of Grapevine, near Dallas/Fort Worth International Airport, has received a $400,000 signing bonus for drilling on city property. The funds have been placed in escrow, until officials decide how to use the money. The city has also received somewhat less than $200,000, annually, for the last two years in tax revenue from private land leased for drilling.

In Grand Prairie, 2010 is the first year that the town realizes proceeds from taxes on oil and gas properties valued at nearly $50 million. The city will receive $330,000 to help run city services and also pay down debt.

Additional information available at: 

• American Natural Gas Alliance
• American Petroleum Institute
• Barnett Shale Energy Education Council
• Foundation for Energy Education
• Independent Petroleum Association of America
• Interstate Oil & Gas Compact Commission
• Panhandle Producers and Royalty Owners Association
• Permian Basin Petroleum Association
• Railroad Commission of Texas
• Texas Alliance of Energy Producers
• Texas Commission on Environmental Quality
• Texas Independent Producers and Royalty Owners
• Texas Oil and Gas Association
• Texas Pipeline Association
• Texas Water Development Board