Friday, 26 June 2015

Contribution of oil and gas to US economic growth

As I've noted in several previous posts, the US fracking industry has grown precipitously in the last decade or so. Oil and gas production has increased by about 50% since 2005. The US is now the world's largest gas producer, and third largest oil producer. Using data on real output (calculated as gross value added) from the Bureau of Economic Analysis, the chart below plots the change in output from oil and gas along with change in output from all other sources. From 2000 to 2013, oil and gas output rose by 72%, while output from all other sources rose by only 25%.  

Using the same figures, it is possible to estimate how much of the growth in real output under both President Bush and President Obama was attributable to growth in the oil and gas industry. Between 2000 and 2007 (the year before Bush entered office to the year of peak output) oil and gas accounted for ~1% of growth in real output. By contrast, between 2008 and 2013 (the year before Obama entered office to the latest available year) oil and gas accounted for ~7% of growth in real output. Indeed in 2013, oil and gas represented 1.7% of gross domestic product––the highest value since 1984.

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