2018 OFFICIAL PUBLICATION OF THE MONTANA PETROLEUM ASSOCIATION
The Continuing Contributions of the Oil and Gas Industry to the Montana Economy CONTINUEd
TABLE 3: Oil and Gas Production Tax Collections, 2017
County Production Tax Percent of Total
Richland $47,843,015 45.0%
Fallon $14,022,158 13.2%
Roosevelt $11,728,664 11.0%
Powder $6,350,654 6.0%
Sheridan $3,360,238 3.2%
Wibaux $2,444,927 2.3%
Dawson $2,771,462 2.6%
Carbon $1,707,734 1.6%
Rest of State $16,097,134 15.1%
Total $106,325,985 100%
Source: Montana Department of Revenue
Oil and gas produced in Montana on federal land is subject to royalties,
rents, and bonuses. Federal collections totaled $18.3 million in 2017.
TABLE 4: Reported Federal Revenues, Montana 2017
Revenue Type Oil and Gas Revenue Percent of Total
Royalties $15,988,442 31.3%
Rents $773,559 1.5%
Bonus $762,956 1.5%
Other $814,087 1.6%
Total $18,339,044 35.9%
Source: Office of Natural Resources Revenue
The Economic Contribution of Oil and Gas Activity in Montana
The presence of an industry adds to the overall economy in three
ways: (a) direct contributions, (b) indirect contributions, and (c) induced
contributions. Direct contributions refer to direct oil and gas
activities such as extraction, refining, and transportation. Indirect
contributions include secondary activities such as construction at the
refineries. And the induced contributions of an industry are all of the
ways that the direct and indirect contributions induce other economic
activity, such as health care demand, housing, and a larger retail sector.
In this report we have taken a very conservative approach to the
analysis of the direct contributions of ongoing oil and gas industry
activities in the state. We only consider three specific activities in producing
(i) the oil and gas production activities in the state,
(ii) the oil and gas transportation activities in the state, and
(iii) the continued operations of the state’s four operating oil
refineries in Billings, Laurel and Black Eagle.
Other contributions could have been included, such as the downstream
employment of those in the wholesale and retail sales of refined
petroleum products and the road construction jobs supported by taxes
on gasoline and diesel sales. Even without these activities included, the
continuing contributions of the industry in Montana are substantial.
TABLE 5: The Economic Impact of Oil and Gas Operations in Montana
Category Units Impact
Total Employment Jobs 32,083
Personal Income $ Millions 2,256
Disposable Pers. Income $ Millions 1,966
Output $ Millions 9,142
Population People 46,465
While many of these jobs are directly in oil and gas industries, other
industries such as retail trade, construction, professional and technical
services (engineers, etc.), and state and local government employ
more Montanans as a result of oil and gas operations. In total these
workers contribute nearly $2 billion in after tax income to Montana
households, and result in over 46,000 more people living in the state.
The oil and gas industry has an outsized impact on the overall economy
in the state, for several reasons. First, it is a very high paying industry.
The spending of oil and gas workers supports more jobs elsewhere
in the economy than would be the case for average or below-average
paying industries. Second, it exports its products to other states. Finally,
it makes a tax contribution to state and local governments that is
large, due to the special tax treatment of extraction industries.
Oil and gas production, refining, and related transportation activities
have a visible and significant impact on the Montana economy. Even
considering the continued slump in production, both the direct and induced
impacts of the industries are substantial. They employ Montanans
at higher than average wages, contribute state and federal tax revenue,
and support many downstream Montana jobs and businesses.
Our analysis shows that the Montana economy gains over 32,000 permanent
jobs in diverse industries and an increase in $2.3 billion annually
in income because of the presence of the oil and gas industry in the state.
It is clear that as the Montana economy strives for income
growth and job opportunities in the years ahead, it is well served
by robust oil and gas industries contributing to those goals.
Todd Klassy | www.toddklassy.com