Research & Commentary: Texas Tech Study Finds $48 Billion in Economic Impact to Lone Star State from Pipeline Industry

Published November 5, 2020

A new report from Texas Tech University (TTU) published in late October found pipeline construction and operations provided over $48 billion in economic impact to the Lone Star State in 2019 alone.

The report, Update to the Economic Impacts of the Texas Oil and Gas Pipeline Industry, was conducted by the Centre for Energy Commerce at TTU, but commissioned by the Texas Pipeline Association (TPA). It also found pipelines supported over 238,000 jobs across the state in 2019, contributed $29.3 billion in gross state product (GSP), and provided the state government and municipalities with more than $2.7 billion in tax revenue.

In the time period since the original study was published in 2013, pipeline mileage across Texas has increased 13.16 percent, with total output from operations and construction increasing by 47 percent, state and local tax revenue increasing by 68 percent, and employment increasing by 40 percent. Employment directly related to pipeline transportation grew by 2.68 percent annually.

“The activities of the Texas pipeline industry, which include the transportation of hydrocarbons from sources of exploration and production to refineries and end-users, are one vital component of the substantial job creation, investment and overall economic growth of the state’s economy,” said Dr. Bradley Ewing, the McLaughlin Endowed Chair of Free Enterprise and Professor of Energy Commerce in the Rawls College of Business at TTU, who prepared the study. “Provided that the pipeline industry maintains effective transportation capabilities, it will continue to generate economic benefits that will likely impact Texas for years to come.”

Also according to the report, by 2060 the pipeline industry in Texas will have generated almost $1.5 trillion in today’s dollars in economic output, $903 in additional GSP, and $84 billion in additional state and local tax revenue. Further, the industry will also be impacting over 492,000 jobs by that time.

“A pipeline system capable of effectively handling increased levels of oil and gas activity is necessary for oil and gas companies to find it economic to operate in Texas,” the report concludes. “From an economic standpoint, the ability to retain and attract oil and gas investments requires a pipeline system that can manage the flow of hydrocarbons in a timely and cost-effective manner. Accordingly, as shown in this study, the economic benefits attributable to the pipeline system are substantial in the state of Texas. Moreover, the upstream and downstream portions of the energy industry (i.e., exploration and production, refining activities, etc.) will generate even more economic benefits to Texas in the form of additional economic impacts provided that these companies have an efficient and effective way to transport their product.”

“Texas pipelines are an essential component of our energy infrastructure,” said Thure Cannon, president of TPA in a press release accompanying the study’s release. “It is clear from this…study that pipelines deliver the robust economic benefits that come from the continued growth and expansion of the oil and gas industry. And, with Texas as one of the fastest growing states in the nation, now more than ever we need pipelines to deliver the hydrocarbons that are used to make the more than 6000 petroleum byproducts we rely on every day, including fertilizer, flooring, perfume, vitamins, soap, clothing and so much more.”

The natural gas and oil hydraulic fracturing has enabled Texas to exploit is cost-effective and abundant, and it can help ensure the United States is the world’s largest energy producer well beyond the 21st Century. Legislators in the Lone Star State should work to insure infrastructure such as pipelines continues to grow meet ever-increasing demand for these fuels. Making sure the necessary pipeline mileage get built to keep up with this demand is a must to help make sure families in Texas, and across the United States, can take advantage of the economic benefits these pipelines provide.

The following documents provide more information about pipelines and fossil fuels.

What If…Hydraulic Fracturing Were Banned? (2020 Edition)
This study from the Global Energy Institute at the U.S. Chamber of Commerce says a ban on fracking in the United States would be catastrophic for our economy. Their analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product by $7.1 trillion. Tax revenue at the local, state, and federal levels would decline by nearly a combined $1.9 trillion. Natural gas prices would leap by 324 percent, causing household energy bills to more than quadruple. By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130 per barrel, while less domestic energy production would also mean less energy security.

What If … Pipelines Aren’t Built in the Northeast?–pipelines-arent-built-in-the-northeast
This study is the fifth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what continued opposition to new pipeline infrastructure projects in the Northeast would mean for the residents and businesses of those states. This opposition could lead to the loss of greater than 78,000 jobs, $7.6 billion in GDP, and $4.4 billion in labor income in the region by 2020.

America’s Progress at Risk: An Economic Analysis of a Ban on Fracking and Federal Leasing for Natural Gas and Oil Development
The study from the American Petroleum Institute (conducted by economic modeling firm OnLocation)  warns that banning federal leasing and fracking on public and private lands, which some presidential candidates have proposed, would cost up to 7.5 million American jobs in 2022 alone, lead to a cumulative GDP loss of $7.1 trillion by 2030, slash household incomes by $5,400 annually, increase household energy costs by more than $600 per year and reduce farm incomes by 43 percent due to higher energy costs. If a ban is enacted, the U.S. would flip from being a net exporter of oil and petroleum products to importing more than 40 percent of supplies by 2030.

Oil and Natural Gas Light the Way for Texans
This report from the Consumer Energy Alliance examined how the shale revolution across Texas has provided benefits to Lone Star State residents by boosting disposable income and revitalizing communities, saving residential users $7.2 billion, and commercial and industrial users $52 billion.

Legislating Energy Poverty: A Case Study of How California’s and New York’s Climate Change Policies Are Increasing Energy Costs and Hurting the Economy
This analysis from Wayne Winegarden of the Pacific Research Institute shows the big government approach to fighting climate change taken by California and New York hits working class and minority communities the hardest. The paper reviews the impact of global warming policies adopted in California and New York, such as unrealistic renewable energy goals, strict low carbon fuel standards, and costly subsidies for buying higher-priced electric cars and installing solar panels. The report finds that, collectively, these expensive and burdensome policies are dramatically increasing the energy burdens of their respective state residents.

Debunking Four Persistent Myths about Hydraulic Fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers—summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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