The oil and gas industry’s largest trade group is going head to head with one of Big Oil’s most outspoken critics in Congress.
In one corner is Rep. Ed Markey, D-Mass., the top Democrat on the House Natural Resources Committee, who last week publicly challenged the American Petroleum Institute’s claims that the U.S. could add 1 million jobs by 2018 if only the government opened more federal lands and waters to drilling.
In the other corner is API president Jack Gerard, who today shot back that critics of the group’s job forecasts either don’t understand the basic economics underpinning the numbers or are adopting “a clever disguise to limit oil and natural gas production in the United States.”
In a conference call with reporters and a letter to Markey today, Gerard defended the forecast, which is tied to a study the consulting firm Wood Mackenzie conducted for API earlier this year.
“Some people still don’t get it,” Gerard told reporters. “And some have resorted to various antics to distort the facts about our industry’s ability to create jobs, to provide an economic stimulus to our economy and increase revenues to the federal government.”
The dispute goes back to Nov. 21, when Markey sent a letter to Gerard insisting that API commercials touting the industry’s job-creation potential were far-fetched, because they included work not directly tied to oil and gas production. The prediction includes direct jobs as well as indirect jobs and so-called induced jobs, which Markey said could include everything from “librarians to rocket scientists.”
To get its total job forecast, the Wood Mackenzie study essentially multiplied the number of predicted direct jobs by 2.5 — assuming that for every one direct job created in the oil and gas industry, another 2.5 indirect or induced jobs also would be established. Markey suggested the Wood Mackenzie analysis was flawed because it used that multiplier only after making assumptions that all direct jobs created each year would be sustained over time.
Markey also noted that the federal Bureau of Labor Statistics has predicted that jobs in the oil and gas industry are set to decline by 16 percent over the next decade.
Gerard said Wednesday that the 2.5 multiplier in the Wood Mackenzie study is actually conservative, compared to other analyses that use multipliers as high as 6.9. “Congressman Markey and other critics now appear to be calling into question the very use of multipliers to predict job impacts” even though the concept is accepted by mainstream economists, Gerard said.
By early afternoon, Markey had weighed in again. He summarized Gerard’s response as “everyone’s wrong but us.”
Despite conflicting job claims from newspaper reports, the Bureau of Labor Statistics and the Congressional Budget Office, Markey said, “API says they’re all wrong — that instead we should trust studies paid for by API that support the industry’s drill baby drill agenda that seems to count valet parking attendants and daycare workers among the new jobs more drilling would create.”