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‘Intellectual Bankruptcy’, Dr. Krugman?

Paul Krugman’s op-ed, “Natural Born Drillers” (New York Times, March 15), purports to show with a hard look at the numbers why no thinking, perceptive person could possibly believe that “Drill, Baby, Drill” is a solution to the nation’s energy and economic woes:

[G]iving the oil companies carte blanche isn’t a serious jobs program. Put it this way: Employment in oil and gas extraction has risen more than 50 percent since the middle of the last decade, but that amounts to only 70,000 jobs, around one-twentieth of 1 percent of total U.S. employment. So the idea that drill, baby, drill can cure our jobs deficit is basically a joke.

Hmmm. Shall I take the strawman, or the phony statistics first?

{Coin flip}: It’s heads. Strawman!

In this op-ed, Dr. Krugman beats the “carte blanche” strawman bloody. I defy him to name a single industry leader who has called for unrestricted drilling. (Enron doesn’t count, Paul.) Oil and gas people live and play in the same environment where they work. We want clean water and pristine beaches, too. We also know that responsible development is compatible with environmental protection.

Historically, groundwater protection and other well-construction matters have been left to the States. That makes sense because geologic and climatic conditions vary widely from Pennsylvania to Louisiana to California to Alaska. Self-appointed experts outside the industry push for more Federal regulation. I know that the EPA can smother industry with regulation, but I don’t trust them to protect my groundwater.

As for the employment statistics, “lazy” and “inept” are two words that come to mind. Although he doesn’t cite a source, Dr. Krugman has apparently relied on the database of the Bureau of Labor Statistics. Indeed, the industry subsector called “Oil and Gas Extraction: NAICS 211″, (part of the Mining, Quarrying, and Oil and Gas Extraction sector) shows the gain in jobs he describes, from roughly 120,000 jobs in 2004 to about 190,000 now. And he apparently stopped there.

190,000 jobs? Doesn’t that seem kinda low for an industry that comprises 8% or so of the economy?

Well, of course it is, because lots of oil industry jobs are counted in other categories. Most notably, the related subsector “Support Activities for Mining: NAICS 213″.

In NAICS 211, you find geologists, draftsmen and petroleum engineers like me, employed directly by the oil companies. NAICS 213 contains people that work for the “service companies” who work for the oil companies. These companies would include Halliburton, Transocean and Schlumberger, the companies that drill, frack, service and equip the wells. Job titles include roughnecks, roustabouts and service pump operators.

NAICS 213 is twice as big as NAICS 211: 379,100 at last count. NAICS 213 is where you find the really explosive job growth: nearly 200,000 jobs since 2004, including almost 70,000 just in the last year.

Neither category includes the jobs in pipelines, refineries, petrochemicals or steel mills that are directly supported by oilfield activity. Or the trucking and construction jobs that aren’t in the oil industry per se, but nonetheless depend on oilfield activity. [The American Petroleum Institute estimates that there are 2.2 million jobs in the upstream sector alone; more statistics (& backup!) at the end of the diary.]

I guess Dr. Krugman either didn’t know, or didn’t think it was important.

He concludes his piece with this remark:

[I]ntellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.

On that we can agree, Dr. Krugman. On that we can agree.

Cross-posted at stevemaley.com.

From American Petroleum Institute’s State of American Energy (pdf link), January 2012.

The oil and natural gas industry currently supports 5.3 percent of total U.S. employment. To put this in perspective, the number of jobs supported by the upstream oil and natural gas industry segment alone in 2010—2.2 million—is larger than the populations of 15 states.

In addition:

  • One out of every five new jobs created between 2003 and 2011 was in the oil and natural gas industry;
  • A Gallup poll found that energy-producing states ranked among the highest in terms of job creation in the first half of 2011, as they did in 2010; and
  • By 2030, the upstream oil and natural gas industry segment could support an additional 500,000 jobs under current U.S. energy policies.

Now consider the projections of a recent Wood Mackenzie study, which found that the industry could add nearly 1.4 million jobs by 2030—or almost three times the number of new jobs currently projected—if the United States adopts policies that encourage development of domestic oil and natural gas resources and facilitate Canadian oil sands production, including construction of the necessary pipeline infrastructure and other related projects.

[Emphasis added. Disclosure statement here. H/T Jxn's Mom.]

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