Oil and gas extraction industry value added in the U.S. 1998-2021

The value added by the oil and gas extraction industry in the United States amounted to 196.23 billion U.S dollars in 2021. The previous year saw a drastic decline in oil product demand due to pandemic-induced lockdowns, and the lowest value added recorded for the oil and gas extraction industry since 2003.

Trends in prices and value

The term 'value added' refers to the difference between the cost of production and the selling price of a product according to demand and the perceived value by the customer. In the past twenty years, the average annual domestic first purchase prices for crude oil in the U.S. rose and fell along roughly the same trajectory as the value added by the oil and gas extraction industry.

Oil crisis and their effect on value added by industry

On the verge of the global financial crisis, oil prices, revenue, and value added reached a high point in 2008 before a significant drop the next year. Following the recession, newer methods such as hydraulic fracturing allowed extraction of previously inaccessible shale gas and tight oil from sandstone. The rapid expansion of the U.S. shale gas industry after 2008 led to an oversupply by 2014. This in turn is reflected in the sharp declining value added in 2015 and 2016. The 2020 oil crisis which resulted from fears of over-supply and storage issues during the pandemic brought about a similarly stark fall in value added.