From Scarcity to Abundance: How the Energy Boom is Transforming America’s Economy

Presentation to Cincinnati Economics Organization

Bernard L. Weinstein, Ph.D.Associate Director, Maguire Energy Institute

Cox School of BusinessSouthern Methodist University

Dallas, Texas

May 14, 2014

NEW BOOM IN THE OIL PATCH

TYPICAL FRACKING PAD SITE IN PENNSYLVANIA

North

America

Russia

Saudi

Arabia*

United

Stat

esIra

n*Chin

a

Canad

aIra

q*

United

Arab

Emira

tes*

Mex

ico

Kuwait

*0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Top Oil Producers in 2013

Country (*OPEC Member)

Pro

du

ctio

n (

bb

l/day

)

Source: International Energy Agency

LUXURY HOUSING IN THE BAKKEN: $2500 PER MONTH

MACONDO EXPLOSION AND OIL SPILL

Offshore Potentially Recoverable Federal Oil and Natural Gas Resources

U.S. Russian Federation

Canada Iran Qatar China Norway Saudi Arabia

Algeria Indonesia0

100

200

300

400

500

600

700

800

681.4

592.3

156.5 160.5 157107.2 114.9 102.8 81.5 71.1

Top Natural Gas Producing Countriesin 2012

Country

Billi

on C

ubic

Met

res

Source: BP Statistical Review of World Energy June 2013

Top Gas Exporting Countries, 2011

Russia

Qatar

Norway

Canad

a

Algeria

Other A

frica

Indonesia

Netherla

nds

Australi

a

Trinidad

& Tobag

o02468

101214161820

Bcfd

Source: Deloitte, Exporting the American Renaissance; Global Impacts of LNG Exports from the united States, Jan. 2013

Cove Point, Maryland LNG Facility to Export Marcellus Gas

PROTESTING COVE POINT

CURRENT LEGISLATIVE AND REGULATORY RESTRICTIONS ON ENERGY INVESTMENT

• Keystone XL pipeline• Restrictions on oil and natural gas exports• Limitations on drilling offshore and on federal

lands• Renewal fuels standard (ethanol mandate)• Cross-state air pollution rule and utility MACT• EPA greenhouse gas limits for power plants• Proposed fracking regulations from EPA and DOI

Gross domestic product

Source: Commerce Department

Real Economic Growth

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q-7%

-5%

-3%

-1%

1%

3%

5%

2010 2011 2012 2013 2014

1Q 2014:0.1%

In percent, seasonally adjusted:

Source: U.S. Department of Labor

2013 2014

U. S. Jobless Rate

J F M A M J J A S O N D J F M A0%

2%

4%

6%

8%

10%

12%April ‘14:

6.3%

J A S O N D J F M A M J J A S O N D J F M A-500

-400

-300

-200

-100

0

100

200

300

400

500

Monthly change, in thousands

Source: Labor Department

April ’14:288,000

2012 2013 2014

Nonfarm Payrolls

2012 2013 2014 2015 2016 2017 20180%

5%

10%

15%

20%

25%

30%

35%

Cumulative Change in Oil Production 2012-2018

U.S.Non-OPEC Excluding U.S.OPEC

Year

Chan

ge in

Pro

ducti

on

Source: International Energy Agency

1988-01-01

1989-01-01

1990-01-01

1991-01-01

1992-01-01

1993-01-01

1994-01-01

1995-01-01

1996-01-01

1997-01-01

1998-01-01

1999-01-01

2000-01-01

2001-01-01

2002-01-01

2003-01-01

2004-01-01

2005-01-01

2006-01-01

2007-01-01

2008-01-01

2009-01-01

2010-01-01

2011-01-01

2012-01-01

2013-01-01100.0

120.0

140.0

160.0

180.0

200.0

220.0

US Oil and Gas Jobs January 1988 through April 2013

US Oil and Gas Jobs (Thousands)

Month

Thou

sand

s

Source: Bureau of Labor Statistics

Jan-2008

Jul-2008

Jan-2009

Jul-2009

Jan-2010

Jul-2010

Jan-2011

Jul-2011

Jan-2012

Jul-2012

Jan-2013-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Percent Change in Employment January 2008–April 2013

Total Nonfarm Payroll Employees (in thousands)

Oil and Gas Extrac-tion Employees (in thousands)

Month

Perc

ent

-1.87%

+24.81%

U.S. Texas Pennsylvania Colorado Louisiana0%

10%

20%

30%

40%

50%

60%

70%

13.55%

23.54%

66.08%

12.64%

19.13%

2.50%

13.07%

2.81%5.17% 6.37%

GDP Growth, U.S. vs. Selected Energy Producing States2008-2012

Mining Sector Real GDP

Total Real GDP, All Industries

State

Gro

wth

Source: Bureau of Economic Analysis

U.S. Texas Pennsylvania Colorado Louisiana-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

17.54%

30.20%

75.36%

20.24%

5.61%

-2.84%

4.70%

-1.22% -0.91%

0.53%

Employment Growth, U.S. vs. Selected Energy Producing States2008-2012

Mining and Logging Em-ployeesTotal Nonfarm Employees, All Industries

State

Gro

wth

Source: Bureau of Labor Statistics

-600 -400 -200 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

KentuckyVermont

DelawareMissouri

WisconsinNew HampshireMassachusetts

West VirginiaArkansas

KansasLouisiana

South DakotaPennsylvania

AlaskaWyoming

TennesseeNew Mexico

IowaMontana

HawaiiSouth Carolina

NebraskaIdaho

GeorgiaOregon

D C Minnesota

MarylandNorth Dakota

OklahomaNevada

ColoradoNorth Carolina

VirginiaUtah

WashingtonArizona

New YorkCalifornia

FloridaTexas

Job Gains and Losses by State:

Dec. 2000 – Mar. 2014

MaineRhode IslandIndiana

New JerseyConnecticut

AlabamaMississippi

IllinoisOhioMichigan

Texas added 36.4% of the jobs in the U.S. during this 13+ year period.

110 Years of Oil and Gas Production in Texas

Total statewide jobs provided or supported by the oil and gas industry

0%

2%

4%

6%

8%

10%

12%

14%

0

10000

20000

30000

40000

50000

60000

70000

80000

Une

mpl

oym

ent R

ate

Thou

sand

Bar

rels

Year

Monthly Crude Oil Production and Unemployment Rate in Texas and California 2000-2013

California Crude Production

Texas Crude Production

California Unemployment Rate

Texas Unemployment Rate

Sources: Energy Information Administration and Bureau of Labor Statistics

THE “PETROSTATE” OF AMERICA

WE’RE NUMBER 1!