April 8, 2012 at 3:47 PM ET
As gas prices reach record highs across many parts of the country, Americans have been blaming oil companies. But as much as they are disliked, the oil and gas industry is also an indispensable part of many states and an asset to their local economies. 24/7 Wall St. has identified the 10 states with the most oil reserves, or the estimated amount of oil in the state, and examined the effects that the industry has on their economies.
In the states with the greatest amounts of oil reserves, those effects can be tremendous. The oil and natural gas industry supports nearly 25 percent of the economies of Texas and Wyoming, much more than the 6.8 percent it supports on a national scale. Every state on this list exceeds the national number by a significant amount.
The oil and gas industry also can have an outsized impact on employment in some states. On a national level, only 4.6 percent of all jobs are attributable to the operations of the oil and gas industry, directly or indirectly. In many states, the industry’s impact on employment is significantly higher. In five states, all of which are included on this list, the industry supports more than 10 percent of all jobs.
While it is not necessarily the cause, the states with the most oil reserves generally have particularly strong economies. Six of the 10 states with the most reserves have among the lowest unemployment rates in the country; seven had the smallest increases in the unemployment rate from 2004 to 2010; and eight of the states had the largest increases in median household income from 2005 to 2010.
To identify the states with the most oil reserves, 24/7 Wall St. reviewed data from the U.S. Energy Information Administration. We also examined data from the Census Bureau, the Bureau of Labor Statistics and the American Petroleum Institute.
These are the 10 states swimming in oil.
Texas is the nation’s largest center for oil, with more than 5 billion barrels of proven reserves. It is also home to 23 refineries, which add to the size of the sector. The oil and natural gas industry supports 24.3 percent of the state’s total economy, which ties with Wyoming for the nation’s largest share. The industry also is responsible for 14.3 percent of total employment in the state, both directly and indirectly, which is the third-highest percentage. In numbers, this represents nearly two million jobs -- the highest in the country.
Alaska, the nation’s largest state by size, is home to more than three and a half billion barrels of crude oil. The oil and natural gas industry supports 16.9 percent of the state’s economy. It also accounts for 10.3 percent of jobs in the state -- the fifth-largest share in the country. The industry likely will expand in the near future as more oil is accessed.
California is the third-largest state by size, and sits on top of the third-largest amount of oil. As a result, the state is home to 19 refineries -- the second most in the country. This oil contributes a significant amount to the economy, supporting 7 percent of the state’s total gross domestic product in 2009. The industry also supports more than 900,000 jobs, or 4.6 percent of total state employment. While the share is rather small, the absolute total number is the second largest in the country.
4. North Dakota
North Dakota has one of the strongest economies in the country. The state currently has an unemployment rate of just 3.2 percent -- the lowest among all states, and even lower than its 2004 rate of 3.5 percent. From 2005 to 2010, median household income in the state increased by 18.6 percent, the country’s highest rate. The state is currently experiencing an oil boom, with crude production in January jumping by 59 percent from one year prior. The oil and natural gas industry supports 11.8 percent of the state’s economy -- the sixth-largest share in the country.
5. New Mexico
The oil and natural gas industry has a strong presence in New Mexico, which sits atop 700 million barrels of proved reserves of crude oil. The industry accounts for 10.6 percent of the state’s economy and is responsible for 7.5 percent of total jobs. From 2004 to 2010, the unemployment rate in the state increased from 5.8 percent to 7.9 percent. While this is a significant increase, it is among the lowest increases in the country for this period.