What Percentage of the Global Economy Is the Oil and Gas Drilling Sector?

Oil is one of the most important commodities in the world. When transformed into petroleum, it is a key energy source used in vehicles, planes, heating, asphalt, and electricity. Outside of being a crucial energy source, petroleum is used in plastics, paints, chemicals, tape, and so much more. It's hard to imagine a world without oil. But just how important is the oil and gas sector to the global economy?

Key Takeaways

  • Oil and gas are among the most important commodities in the world.
  • The oil and gas sector is made up of three different segments: upstream, midstream, and downstream.
  • The industry employs millions of people around the world.
  • Global consumption and demand continue to boost growth in the oil and gas sector.

The Oil and Gas Sector: An Overview

The oil and gas industry is a key driver of the global economy. In fact, it's one of the largest industries in the world. In the United States alone, the industry accounts for 4.8% of the nation's GDP. Exploration and production make up a large portion of the global economy, and the growth of this industry is only expected to increase in the future. For instance:

  • The 2023 outlook for oil demand rose by 30,000 barrels per day to 101.19 million barrels per day
  • The estimate for 2024 is 102.8 million barrels per day

The energy sector, which includes oil and gas, employed more than 41 million people across the globe in 2019. This includes about 6.3 million in the oil supply segment and 3.9 million in gas supply. That isn't surprising when you consider how countries use these resources, including heating, fuel, electricity, industrial production, and manufacturing.

The sector is divided into three main segments

  • Upstream; This segment consists of the exploration and drilling to find oil and extract it from the earth.
  • Midstream: These are activities like transportation and storage.
  • Downstream: This area deals with the refining and marketing of the finished product

Upstream activities are considered to be the most crucial. That's because, without the discovery and drilling of oil, all the rest would not exist.

The largest global producers of oil are the United States, Saudi Arabia, and Russia. These three countries produced approximately 40 million barrels of oil per day in 2022. That is 43% of total world production for a total of 43.29 million barrels per day.

Exploration and Production

According to market research by IBISWorld, total revenues for the oil and gas drilling sector came to approximately $4.3 trillion in 2023. This sector is composed of companies that explore, develop, and operate oil and gas fields. It is also sometimes referred to as the oil and gas exploration and production (E&P) industry.

The industry includes companies that specialize in crude petroleum production, the mining and extraction of oil from shale or sands, and the recovery of hydrocarbon liquids. Some of the biggest oil and gas players include Exxon, Chevron, and BP. The sector also includes producers that only work in the natural gas field and those that recover sulfur from natural gas. It does not include companies that transport, refine, or market oil and natural gas.

One thing to keep in mind is that only estimated revenues from included activities for companies that perform all operations are counted toward the $2.1 trillion industry figure. These companies are also referred to as integrated oil companies, supermajors, or big oil. As of July 2023, there are about 595,700 people employed in mining, quarrying, and oil and gas extraction in the United States.

The nature of oil and gas exploration projects means that the industry relies much more heavily on capital equipment than human labor, so employment is not likely to rise as much as total market capitalization.

Global Production and Consumption

The largest global producers of oil are the United States, Saudi Arabia, and Russia. These three countries produced approximately 40 million barrels of oil per day in 2022. That is 43% of total world production for a total of 43.29 million barrels per day.

Emerging economies have driven demand for the production of oil and gas. This is particularly true in the extremely populous BRICS. This acronym stands for Brazil, Russia, India, China, and South Africa. Together, their gross domestic product (GDP) was 25.77% of global GDP. This is compared to the combined GDP of all G7 nations, which was 51.87%

The E&P industry looks to have a bright future on the back of this demand. Furthermore, there are plenty of oil reserves throughout the globe, though some of these reserves are difficult to reach. As technology improves in the future, these reserves will become more accessible, as was the case with shale fracking in the United States.

The BRICS invited six other nations to join the group: Argentina, Ethiopia, Iran, Saudi Arabia, Egypt, and the United Arab Emirates. Full membership is expected to begin on Jan. 1, 2024.

What Portion of U.S. GDP is Oil and Gas?

Oil and gas is one of the world's most important sectors. It's also a key component of the U.S. economy. According to the American Petroleum Institute, the sector employs 10.3 million people across the country. The organization also states that the industry makes up roughly 8% of U.S. GDP.

Why Is the Oil and Gas Sector Important to the Economy?

The oil and gas sector is one of the world's most important industries and contributes significantly to the economy. Demand for labor is high in the energy sector, with more than 65 million individuals employed around the world in 2019. This includes 8 million jobs in the oil supply field and 3.9 million in the gas section. Consumer demand and production keep this sector viable, as these commodities are used for heating and electricity as well as the production and manufacturing of goods and services.

What Is the Definition of Clean Energy?

Green energy is defined as any form of energy source that replaces energy derived from traditional fossil fuel sources. It is made up of renewable sources, including solar, hydropower, wind, and geothermal. Unlike fossil fuel sources, green energy comes from renewable resources. This means that their supplies are unlimited and cannot be depleted. This sector is a key driver for the economy and is projected to grow significantly.

The Bottom Line

Consumption and demand for oil and gas continue to make this one of the major drivers for the global economy. Countries like China, India, and Russia are boosting the need for petroleum-based products as their economies continue to grow while developed countries continue to experience a boost in demand and consumption. As an investor, this may factor into some of the important decisions about whether to enter into or expand an existing position in this sector.

Article Sources
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  1. U.S. Energy Information Administration. “2020 Inflation-Adjusted U.S. Energy Since 2002.”

  2. S&P Global Commodity Insights. “Global Crude Production Growth Seen in 2023, 2024 as US, Others Offset OPEC Cuts: EIA.”

  3. International Energy Agency. “World Energy Employment,” Page 11.

  4. U.S. Energy Information Administration. “What Countries Are the Top Producers and Consumers of Oil?.”

  5. IBISWorld. "Global Oil & Gas Exploration & Production Market Size 2005–2028."

  6. U.S. Energy Information Administration. “Oil and Petroleum Products Explained.”

  7. U.S. Bureau of Labor Statistics. "Industries at a Glance: Mining, Quarrying, and Oil and Gas Extraction: NAICS 21."

  8. International Monetary Fund. “Major Advanced Economies (G7).”

  9. The World Bank. “GDP (Current US$).”

  10. U.S. Environmental Protection Agency. “Unconventional Oil and Natural Gas Development.”

  11. Atlantic Council. “The BRICS Come to the Middle East and North Africa.”

  12. American Petroleum Institute. "Oil & Natural Gas Contribution to U.S. Economy Fact Sheet."

  13. International Energy Agency. “World Energy Employment,” Page 11.

  14. S&P Global Commodity Insights. “Russian Crude Flows to India, China Proving a Boon for Other Asian Oil Importers.”

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