The Oil Company That Doesn’t Want to Create Too Many Jobs

It is nearly impossible to read a pitch for expanding U.S. oil and gas production without being confronted with impressive estimates of how many jobs it will create. Wood Mackenzie has estimated that expanded oil and gas production could support 1.4 million new jobs by 2030. Citigroup has claimed an upside potential of as many as 3.6 million jobs from new oil and gas production by 2020.

So I was surprised when I stumbled across this promise on the website for American Shale Oil (AMSO), which hopes to develop a commercial shale oil plant in Colorado:

Even at commercial stage, the AMSO process is estimated to require approximately 300 employees (to support a 100,000 barrels per day plant).

This isn’t a boast about how AMSO will create 300 jobs – it’s a promise that it won’t create any more. What gives?

Many of the biggest prospects for U.S. oil development are in remote or low-population parts of the country that fiercely protect their way of life. They’re often thrilled to have development that lets local people find jobs, but they aren’t looking for a big influx of new workers who would fundamentally change their communities.

Take a look at North Dakota, the poster child these days for the wonders that oil production can do to combat unemployment. In 2006, right before the shale oil boom started, the North Dakota labor force numbered around 360,000. Had the state followed the rest of the country, it would have had unemployment around 8 percent, and about 30,000 people would have been looking for work. Instead, its unemployment rate is closer to 3 percent, and its labor force now totals 390,000 people, meaning that nearly 380,000 people have jobs.

This suggests something striking: even had every one of those 30,000 people found a new job because of the oil boom, North Dakota would still have had to import more than 20,000 workers to meet demand. This sort of change can be enormously disruptive, particularly to those incapable of working in or profiting from the industry. Here’s some context: North Dakota has a population of 680,000; the biggest city even remotely near the oil fields has population 60,000; and the tenth largest town clocks in at a tiny 7,800 residents. There’s little reason to doubt that many North Dakotans would have actually been much happier with a boom that delivered half as many jobs, though there are, of course, many others who would be thrilled to see employment expand even more.

It shouldn’t be surprising, then, to find that people in would-be oil producing areas like northwestern Colorado have mixed feelings about big employment gains from new oil production. It’s important to keep this in mind when thinking through the forces that might shape future development. American Shale Oil promises that its “ unique process will not strain the local infrastructure”. There’s good reason to believe that it understands the complex politics of job creation better than some industry boosters in Washington do.