Texas Independent Producers and Royalty Owners Association (TIPRO) released the report on Monday, detailing the industry’s dynamics in 2022.
That gross regional product (GRP) is close to four times that of the next closest state, California, and is an increase of more than $120 billion from 2021 — dwarfing the amount that could be attributed just to cost inflation.
In 2020, the GRP was $278 billion. The Texas oil and gas industry accounted for 16 percent of the state’s economic output in 2022.
Overall, more than 347,000 Texans work in the industry and the average annual wage for those workers is almost $140,000.
The last two months of 2022 data are not yet available, but through October, the state was on pace for eclipsing its 2021 level by roughly one million barrels of oil and 400 billion cubic feet of gas.
Like the rest of the state’s economy, the oil and gas industry is recovering from the shock caused by the coronavirus pandemic and its subsequent government-mandated shutdowns — which grounded travel of all sorts and dramatically shifted the energy demand’s status quo.
More than half of the jobs added in 2022 came from support services for oil and gas operations; oil and gas drilling, machinery manufacturing, and construction also added sizable chunks of employees.
“Despite facing a number of unique challenges, including supply chain bottlenecks, inflationary pressures, workforce shortages and an adversarial federal policy environment, the U.S. oil and gas industry continued to offer significant economic support in 2022,” said Jud Walker, chairman of TIPRO and president and CEO of EnerVest, Ltd in a release. “Oil and natural gas development, led by Texas operators, will play an important role in meeting growing global energy demand for decades to come under any realistic scenario.”
The oil and gas industry paid nearly $12 billion in severance taxes during the 2022 calendar year, close to double the previous year. That total is about one-fifth of the state’s projected treasury and savings account surplus. When expanded to all state taxes and royalty payments, according to TIPRO, the number jumps to $24.7 billion.
That pot of surplus dollars will be the feature of this year’s legislative session, with interests across the spectrum vying for a piece of the record-sized pie. Property tax cuts, school funding and teacher salaries, infrastructure projects, and a litany of other topics are all on the Legislature’s plate.
The Dallas Federal Reserve’s quarterly survey of oil and gas company executives shows one-third of respondents identified inflation and supply chain as the “biggest drag” on industry growth. About 10 percent pointed to regulatory posture by the federal government as the largest obstacle.
One of those executives wrote in the “special comments” section, “Energy policies have become so random as to be laughable, except for the fact that the increased vitriol and regulations and fees are quite successful at killing large segments of the energy industry.”
“I have not been so discouraged since I was living in Bakersfield in the mid-’80s when the price dropped to $6 per barrel, and I was a young employee.”
Overall, Texas’ economy is recovering remarkably from the last few years of turmoil. The state’s adjusted unemployment rate dipped below 4 percent in December for the first time since February 2020.
Looking forward, TIPRO’s report expects U.S. gas exports to rise further due to the disruption in Europe’s gas market caused by the Russia-Ukraine conflict as countries previously reliant on Russian gas turn to other sources either out of necessity or their own volition.
That change in supply has opened a gap for Texas gas to fill, and it shows with the massive GRP recovery the industry made last year.
Read More: Texas Oil and Gas Industry Adds 24,000 Jobs in 2022, Generates Over $320 Billion