Economic Impact of Oil and Gas in Texas


The oil and gas industry paid over $8.5 billion in Texas state and local taxes and royalties in fiscal 2009. The taxes paid go toward funding Texas schools, textbooks, Medicaid and children’s health insurance programs, child protective services, roads and first responders such as a poilce and firefighters. The oil and gas industry includes exploration and production, pipelines, refining, petrochemicals, natural gas distribuiton, petroleum, refining, petrochemicals, natural gas distribution, petroleumproducts wholesaling, and oilfield equipment manufacturing.

Oil and gas companies pay far more in state and local taxes and royalties on a per worker basis than does the average private sector company. In fiscal 2009, oil and gas companies paid an average of $27,000 per employee in state and local taxes and royalties. By comparison, other private sector companies averaged only $4,800 per job. This five-fold difference highlights the critical role of oil and gas plays to keep the Texas economy – and Texas government – viable and resilient. 

Better jobs, better wages

Oil and gas employers provide more than 315,000 high-quality, high-paying jobs in Texas. The average oil and gas worker earns about $107,000 a year; the rest of the private sector workforce earns an average of $44,000 a year.

Jobs creating jobs

Given the large capital outlays and other expenditures that accompany oil and gas jobs, each job tends to generate many other jobs in Texas, creating a “ripple effect.” According to one economic model, manufacturing at nearly 17 additional jobs created for every oil and gas  job.  The second highest multiplier in Texas is in petroleum refining, creating 14 additional jobs for every refining job. The ripple effect stems from the purchases that oil and gas companies make, including cor machinery, pipe, fuel, raw materials, concrete, steel, engineering services, legal services, well services, electricity, maintenance, construction, and land, as well as pay to their employees.

Texas Rainy Day Fund

Texas maintains an Economic Stabilization Fund (ESF) or “Rainy Day Fund”that is funded almost exclusivley by oil and gas taxes. In fiscal 2009, the transfer to this “Rainy Day Fund” was a record $2.2 billion, all of which came from oil and gas taxes. The Rainy Day Fund has been used tohelp close budget shortfalls, provide propety tax relief, and to fund public shools; teachers’ compensation  and health insurance; Medicaid; children’s health insurance; child protective services; foster child care and adoption services; criminal justice programs; funding for the Emerging Technology and Texas Enterprise Funds; and disaster recovery programs.

The Texas Comptroller estimates that a total of $8.1 billion will be in the Rainy Day Fund 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.

Top 100 PB Producers 2010