Overview of the Oil and Natural Gas Industry by po2933


   Overview of the Oil and Natural Gas Industry
                   The U.S. oil and natural gas industry is     vast oil and natural gas resources to work
                   the backbone of this nation’s economy.       for the benefit of this nation.
  The oil and      According to the latest available data,
  natural gas      the oil and natural gas industry supports    The U.S. needs a balanced energy policy
                   5.9 million jobs – 1.8 million people        that promotes energy efficiency,
  industry         directly employed by the industry, with      conservation and greater supplies of all
  supports 5.9     more than 4 million indirect jobs. The       sources of energy, including the
  million jobs.    oil and natural gas industry is massive      production of domestic oil and natural
                   and requires huge and often high-risk        gas in an environmentally responsible
                   investments. Its earnings contribute         manner. This policy must not only
                   greatly to the American economy and          remove barriers to domestic oil and
                   way of life and allow companies to           natural gas production, but must also
                   reinvest in the facilities, infrastructure   create an environment that incentivizes
                   and new technologies that keep America       the creation of advanced energy
                   going strong well into the future while      technologies. History has shown that
                   generating returns that will meet            government mechanisms that interfere
                   shareholders’ expectations.                  with market forces such as price controls,
                                                                punitive taxes, and picking winners and
                   Oil and natural gas development on           losers among competing fuels have been
                   federal lands, both onshore and              unsuccessful and ultimately, consumers
                   offshore, help our nation reduce its         very often pay with increased prices at
If we want to      dependence on foreign sources and            the pump.
bolster the U.S.   provides more revenue for the U.S.
economy, create    Treasury – helping pay for vital             Global Energy Markets: Crude oil is a
                   programs and reducing pressure on U.S.       globally traded commodity, and natural
jobs, and          taxpayers. Oil and natural gas leasing       gas is traded through a handful of
enhance U.S.       and development has generated more           regional markets. As with any
global             than $200 billion since 1953 through         commodity, the fundamental forces of
                   bonus bids, royalties and lease rental       supply and demand are the primary
competitiveness,   payments.                                    drivers in determining their market price.
strengthening                                                   There are also other factors that affect the
U.S. energy        The oil and gas industry is not immune       price of crude oil and natural gas,
development is     to the current financial crisis and some     including political instability in oil
                   companies have had to reduce their           producing regions of the world, weather
crucial.           investments; others have not. Time will      related disruptions such as hurricane
                   reveal the full impact of this crisis but    activity in the Gulf of Mexico, and the
                   the industry is accustomed to up-down        decline in the U.S. dollar.
                                                                According to the U.S. Energy
                   Due to the financial crisis, urgent action   Information Administration’s 2008
                   on all aspects of energy policy is more      Annual Energy Outlook, U.S. total
                   important than ever. U.S. energy             primary energy consumption is expected
                   development is crucial to any effort to      to grow by 19 percent by 2030. Global
                   bolster the U.S. economy, create jobs,       energy demand is expected to increase 50
                   and enhance U.S. global                      percent in the same timeframe. World
                   competitiveness. In recent months, the       demand for oil has increased from 77
                   American people have made it clear           million barrels per day in 2001 to 86
                   they favor greater access to America’s       million barrels per day in 2007. By 2030,
                                                                world petroleum demand is estimated to
 Overview of the Oil and Natural Gas Industry (cont’d)
grow about 35 percent, to 112.5 million        the oil and gas industry were
barrels of oil equivalent per day.             approximately 8.1 cents on each dollar
                                               of sales – a penny above the five-year
Our economy depends on reliable supplies       average for all U.S. manufacturing           World demand
of energy for jobs and manufacturing           industries and equal to all U.S.             for oil has
growth, transportation of goods and            manufacturing excluding the auto
people, agriculture, and our nation’s          industry.                                    increased from
security. The U.S. produces less than 40                                                    77 million
percent of the oil we consume; for the rest,   Investment in the Future –                   barrels per day
the U.S. relies on the global market. The      Alternative Energy Resources :
United States’ number one source of            Between 2000 and 2007, the U.S. oil
                                                                                            in 2001 to 86
imported crude is Canada.                      and natural gas industry invested an         billion barrels
                                               estimated $121.4 billion in emerging         per day in
Despite significant growth of renewables       energy technologies including                2007.
and increases in energy efficiency, more       renewables, such as solar, wind and
than half of the world’s energy demand         geothermal power, frontier
will be met in 2030 by oil and natural gas,    hydrocarbons, as well as shale oil and
as is the case today.                          oil sands, and end-use technologies,
                                               such as fuel cells. This investment
Who Owns Energy Companies?                     represents 65 percent of the total $188
Chances are you do. In fact, tens of           billion spent by all of industry and the
millions Americans have a stake in the         federal government combined on
U.S. oil and gas industry. According to a      emerging energy technologies during
2007 U.S. study, only 1.5 percent of U.S.      this time period.
oil and natural gas company shares are
owned by corporate management. This            Moreover, publicly announced non-
means that 98.5 percent of oil and natural     hydrocarbon investment by the U.S. oil
gas company shares are owned by                and natural gas industry is estimated at     The United
individual investors, IRA accounts or          $1.7 billion, representing five percent of
other individual retirement accounts,          the total investment approximately           States alone
pension funds, mutual funds and other          $32.7 billion. The industry’s top            consumes 20
firms, and institutional investors.            investment is in wind with others made       million barrels
                                               in solar, geothermal and landfill digester   of oil and
Industry Earnings – the Key to                 gas.
Industry Investment: The oil and natural                                                    nearly 57
gas industry is large and capital-intensive.   Serving as the Backbone of Our               billion cubic
It is critical that U.S.-based oil companies   Economy: The oil and natural gas             feet of natural
have the capability to compete with state-     industry reliably supplies the energy
                                               that supports our country’s economic
                                                                                            gas each day.
owned oil companies that are fully backed
by government coffers.                         growth and sustainability. Through the
                                               creative use of new technologies and
 U.S.-based companies routinely invest         innovative practices, this progress will
billions of dollars each quarter into          be attained in balance with consumers’
exploration, research, development and         needs, the countries’ economy, and our
technology. Between 1996 and 2007, the         natural environment.
U.S. oil and natural gas industry invested
more than $1.2 trillion in a range of long-    To learn more about the oil and natural
term energy initiatives.                       gas industry, please visit API’s website
From 2003 to 2007, average earnings for        at www.api.org.

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