One of the hottest issues in this election has been the unemployment rate around the nation. Many have argued their own strategies for lowering the unemployment rate, which is currently sitting at 7.8%. While most of us are aware that government unemployment figures are incredibly misleading, they are nothing if not consistent in their measurement, however flawed that may be. But could the answer to lowering our jobless rate be as simple as our most crucial fossil fuel? [for more crude oil news and analysis subscribe to our free newsletter].
Crude oil has had a leading role in U.S. energy consumption for decades, as we consume more of this commodity than any country in the world by a sizable margin. But as technology improves, U.S. production has steadily increased and is on its way to grab the number one spot in the world. This opportunity could bring thousands of new jobs to the economy and perhaps relieve the pressure that has been weighing for years.
The Oil Effect
To see how the oil industry has impacted jobs, we took a look at the production of each individual U.S. state as well as their unemployment rates. The results were quite clear. Eight of the top ten oil-producing states had lower jobless numbers than the country as a whole, with the unemployment rates averaging out at 5.9% for these states. Some notable states include North Dakota and Oklahoma who have current jobless rates of just 3% and 5.2% respectively [see also Top 5 Global Oil Stocks by Market Cap].
This begs the question as to what would happen to the unemployment rate for the nation if drilling and other techniques were to be increased. “IHS says the oil and gas drilling boom, which already supports 1.7 million jobs, will lead to the creation of 1.3 million jobs across the U.S. economy by the end of the decade” writes Associated Press.
If this plan were as easy as pointing out the facts and letting oil producers run wild, it would have been done a long time ago. The environmental impact of drilling, as well as some newer methods like fracking, can have nasty impacts on the surrounding community, which is the main thing holding production back. Some of these side effects include contaminating ground water as well as setting off earthquakes, not to mention the destruction of local habitats. And let’s not forget that many states simply do not have significant oil reserves to work with.
This too has become a political hotbed, as each presidential candidate has their own ideas on how to move forward with energy. It is generally agreed that Mitt Romney would be better for the oil industry while Barack Obama would focus more on alternative sources like wind and solar. Though we won’t know anything until November 7th, keep a close eye on the election results and adjust accordingly, as it could have a major impact on not only the oil industry, but our unemployment rates as well.
Disclosure: No positions at time of writing.