WV Oil & Gas Employment Numbers: Underreported by 14K?

MDN reported two days ago that WorkForce West Virginia reported that direct jobs held by West Virginians in the oil and gas industry in the state had actually decreased from 2010 to 2011 (see this MDN story). We observed the total number of jobs cited, 2,179 in 2011, seemed really low, and perhaps inaccurate. WorkForce WV says that’s the total number of “direct” jobs held by West Virginians so we took them at their word.

But what’s a “direct” as opposed to an “indirect” (but created because of the drilling industry) job? Seems we’ve hit some semantic issues here. According to the Independent Oil and Gas Association of West Virginia, the actual number is something over 16,000 jobs:

…the vice president of the Independent Oil and Gas Association of West Virginia cited a study commissioned by the America’s Natural Gas Alliance that shows 16,888 gas workers in the state for 2010.

The report…lists the 16,888 number for 2010 as the "employment contribution of unconventional gas." The Marcellus and Utica shale formations are considered by the industry to be unconventional because of the horizontal drilling and fracking needed to extract the gas.

This employment contribution statistic is a number that includes jobs created for those working in the drilling fields, but also for those working in support positions. The study refers to this concept as "direct, indirect and induced" jobs. It states that direct gas jobs are for those who "explore, produce, transport and deliver natural gas to consumers or provide critical supplies or on-site services that support unconventional gas activity."

The indirect jobs are held by those who supply material or services for the industry, which may be someone who works for a sand or chemical provider. The induced jobs are those caused by the gas workers spending their money, which could include those working for restaurants or hotels.

However, the WorkForce statistics show the number of West Virginia residents working directly for gas and oil drillers has not increased over the past two years, despite a continued upswing in drilling and fracking.

"Our data comes from all Unemployment Insurance-covered employers themselves. They are required by federal and state law to submit employment and wage information on a quarterly basis," said WorkForce spokeswoman Courtney Sisk.*

You say tomato, I say tomahto. Whose numbers are correct? MDN thinks it’s likely much closer to the 16K number than the 2K number. There is a “trickle down” effect from the industry creating jobs throughout the economy—and the industry should be properly credited with creating those jobs. And many of those jobs are held by West Virginians—many more than is reflected in the 2,179 number by WorkForce WV.

*The Intelligencer/Wheeling News-Register (Jun 15, 2012) – Drilling Job Estimates Differ by 14,000