Drilling into Big Oil's big job claims

@CNNMoney April 25, 2012: 4:00 PM ET
The oil industry said it created one out of every ten new U.S. jobs in 2011, but it's direct hiring was less than that.

The oil industry said it created one out of every ten new U.S. jobs in 2011, but it's direct hiring was less than that.

NEW YORK (CNNMoney) -- Big Oil is about to report big profits this week.

So the industry is trying to focus people on a different story -- that it is a big jobs producer, worthy of its tax breaks and public appreciation in this time of still high unemployment.

This week, the industry went on the offensive, saying that one in ten of the new jobs created in America in 2011 were oil jobs.

And it launched an ad campaign saying it could create another million jobs in the next seven years if it gets greater freedom to drill wherever it thinks it might find more domestic oil.

"Our industry is successful, and our nation shares in and benefits from that success. We need to remember that when earnings are released," said John Felmy, chief economist of the American Petroleum Institute.

Those profits are forecast by analysts surveyed by Thomson Reuters to come to $21.2 billion for the quarter, or just less than $10 million an hour over the course of three months.

The oil industry was one of the few recession-proof sectors, piling up $290 billion in profits over the last four years, according to Thomson Reuters.

When combined with high gas prices, those profits make Big Oil an attractive target for consumer anger and politicians looking for more tax revenue.

"With record profits and rising production, I'm not worried about the big oil companies," said President Obama last month, before Congress rejected his call on the end of some industry tax breaks. "That's why I think it's time they got by without more help from taxpayers who are already having a tough enough time paying the bills and filling up their gas tank."

Industry leader Exxon Mobil (XOM, Fortune 500) is forecast to report nearly $10 billion in profits for the quarter all by itself on Thursday.

Parsing the job numbers: The jobs Felmy is citing are based on research by energy industry consulting firm IHS CERA, which earlier this year estimated that the industry produced 150,000 jobs in 2011.

Another 150,000 jobs a year over seven years would create the million additional jobs the industry promises.

But that job count comes from the broadest possible estimate of oil jobs.

It includes everyone from the roughneck in North Dakota drilling a new oil well, to a trucker driving equipment to that oil job site, to jobs created by the spending of those oil workers, such as a clerk at a Wal-Mart (WMT, Fortune 500) or a stripper serving the workers drawn to one of those North Dakota oil boomtowns.

While job estimates, using a so-called multiplier effect of spending, are common in economic impact calculations, the "direct hiring" by the oil industry is far more modest.

The 36,000 jobs specifically created to drill for oil and natural gas, refine petroleum or coal products, or for pipeline operation or in gas stations, came in well below "direct hiring" in other industries, which don't enjoy the same tax breaks the Obama administration has been fighting to end for Big Oil.

The construction industry is prime among them -- adding 69,000 jobs in 2011.

Not all of those came from the battered home building sector within construction, but residential construction did add a combined 36,600 employees, or about the same as direct hiring in the oil industry.

Automakers and auto parts suppliers added a combined 51,000 jobs, and that doesn't even count the 50,000 additional jobs added at auto dealers and parts retailers.

And while General Motors (GM, Fortune 500) and Chrysler Group were saved by government loans and bailout money, most of the new jobs are coming at firms that did not get direct bailout benefits, such as Ford Motor (F, Fortune 500), the U.S. plants of foreign automakers, the parts makers and the dealerships.

Department stores, grocery and beverage stores, schools, hotels and trucking companies were also sectors tracked by the Labor Department that added more jobs than the direct hiring at oil companies.

But even though the oil industry isn't adding as many jobs as many other industries, it is adding jobs faster. Jobs in the various areas that make up the industry grew by 3% last year, a healthy pace of growth.

And within those sectors, jobs drilling for oil and natural gas shot up 15.6%. To top of page

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