Americans seem to have a love-hate relationship with major energy companies. On the one hand, our iconic brands are global leaders and symbols of U.S. technological and economic prowess. On the other hand, Big Energy takes the heat when the public gets restive over rising gas prices, or there’s an extended power outage.
A new Progressive Policy Institute (PPI) report highlights an underappreciated fact about energy companies—they are huge investors in the U.S. economy. In fact, along with telecoms and Internet-based businesses, they are leading our economic recovery.
Each year, PPI economists Michael Mandel and Diana Carew rank America’s top 25 “Investment Heroes”—the U.S. companies (excluding finance) that are making the biggest capital investments in economic innovation and jobs here at home. This year’s report shows that 10 U.S. energy companies made the list. These companies, involved in the exploration and production of oil and gas, or in energy distribution and power, invested a total of $57 billion in domestic capital expenditures last year. That figure represents 37 percent of the $152 billion that all 25 companies pumped into the U.S. economy in 2013. The energy companies on the list included many household names—Exxon (3), Chevron (4), ConocoPhillips (8), Exelon (10), and Duke Energy (11). But some lesser-known firms made the cut too, including Energy Transfer Equity (16), Enterprise Product Partners (18), and FreeportMcMoRan (24). All are helping to spur America’s energy transformation by investing in the nation’s shale oil and gas boom.
The underlying message is that innovation drives investment and job growth. Advances in energy production technology—such as hydraulic fracturing and horizontal drilling—have triggered a new energy boom, as companies go after fossil fuel resources long considered too difficult or expensive to recover. This investment, in turn, has yielded both job growth and higher tax revenues in old industrial states like Pennsylvania, and places far from America’s traditional oil patch, such as North Dakota, where unemployment has fallen to just 2.8 percent, lowest in the nation. The Bureau of Labor Statistics reports that Pennsylvania, a core Marcellus Shale state, lost a net total of 74,133 jobs between 2007 and 2012, however the oil and gas industry added nearly 21,000 jobs.
Energy companies are investing in the infrastructure and technology necessary to turn America from a major importer to a major exporter of oil and gas. In fact, the United States is on course to surpass Russia as the world’s leader in oil and gas production in this decade. And this increased gas production has yielded lower natural gas prices for electricity generators, the chemical and manufacturing sectors, and for consumers who use gas in their homes. The influx of cheap natural gas has prompted foreign manufacturers to start looking at the United States as a place to move production.
Of course, it’s essential to balance environmental considerations against the economic benefits of energy innovation. But at least for now, it’s important to allow the energy investment boom to continue to drive investment and job and economic growth.
Freeman is a senior fellow and director of the Energy Innovation Project at the Progressive Policy Institute.