Can Rick Perry Create 1.2 Million Energy Jobs? Part II

My earlier post regarding Rick Perry’s energy plan appears to have attracted some attention. I want to follow up on one important point.

First a recap of what I wrote:

“The numbers that Perry and Romney are offering for job creation in the energy sector are unrealistic. They assume that they will be reversing deeply anti-industry Obama policies that don’t actually exist, ignore real constraints at the state level, and don’t properly account for market dynamics. Six hundred thousand is a pretty hard upper limit for the number of jobs that a new policy might create by 2030, of which fewer than two hundred thousand might actually be in oil and gas.”

I focused my previous critique on a study by the consultants Wood Mackenzie for API on which the Perry and Romney plans appeared to be based. Ben Domenech has pointed out that Perry doesn’t actually rely on the WoodMac study for his 1.2 million job number; instead, Perry totals up numbers from several other pieces of work. In particular, I had observed that WoodMac got 160,000 of its jobs from California and New York, and noted that future development in those states would likely be hard to influence through federal policy. That led me to dock a bunch of Perry’s promised jobs. Domenech points out, though, that New York and California don’t get mentioned in Perry’s plan.

What’s going on here? Perry does cite the WoodMac study as the source for his aggregate 1.2 million job estimate – see the sole reference in the graph on page fifteen of his plan (which is reproduced prominently on his website). But this citation is incorrect. The numbers in his chart don’t actually come from the WoodMac study -- he assumes slightly different policies from the ones that WoodMac does. Perry should not be leaning on the WoodMac study for intellectual support.

That leaves us with a question: how does Perry get to 1.2 million jobs without including New York or California?The answer may surprise you: he assumes that Obama will shut down oil and gas production in Pennsylvania, Utah, Colorado, North Dakota, Montana, New Mexico, and Wyoming. He also assumes that Obama will kill the Eagle Ford shale in Texas for good measure.

Why do I say this? Perry claims that his policies will create 250,000 jobs in the Marcellus shale, 500,000 in the Western states, and 68,000 in the Eagle Ford. The Marcellus number comes from this study; the Western states number from this one;  and the Eagle Ford numbers from here. All of these numbers are projections of total jobs. These are not new jobs. They are not even projections of jobs relative to some hypothetical policy where Obama makes oil and gas production more expensive and fails to open up new lands. They are jobs relative to a hypothetical case where Barack Obama destroys the domestic oil and gas industry. This case is totally implausible.

To get a sense of the scale of the exaggeration, let’s go back to the WoodMac numbers. They project that reversing Obama’s anti-fracking policy (which, as I noted in the previous post, doesn’t actually exist) could add 19,000 jobs to the Pennsylvania total, a far cry from the 250,000 that Perry claims he’ll create. They project that reversing the same non-existentent policy in UT, CO, ND, MT, NM, and WY would  create 124,000 jobs, while opening up additional lands in those states – one place where the Perry/Obama contrast is real – would create another 128,000 jobs, far short of the 500,000 that Perry invokes. The Eagle Ford is trickier to sort out, since WoodMac only gives state-level estimates, but the numbers are much less significant as well.

I don’t mean to pick on Rick Perry. Mitt Romney has embraced similar numbers. And I’ve been writing for a long time that President Obama’s green jobs promises are pretty problematic too. (One other point: just because the jobs numbers don’t work doesn’t mean that the policy ideas are bad; indeed I like some of them.) But that doesn’t change the bottom line: the numbers that Rick Perry has promised for energy job creation simply don’t hold up. Indeed, the more you drill down, the less realistic they look.