In recent years, much media and political attention has focused on oil and natural gas industry earnings. But the oil and natural gas industry, like other commodity businesses, is highly cyclical, and the industry’s earnings make possible the huge investments that help ensure America’s energy security.

Typically, oil and natural gas earnings are in line with the average of other major U.S. manufacturing industries. This fact is not well-understood, however, in part because reports usually focus on only half the story—the profits earned.

Additionally, U.S. oil and natural gas companies actually pay considerably more in income taxes than other firms. In 2009, for example, the oil and natural gas industry’s effective tax rate averaged 48.4 percent, as compared to 28.1 percent for other S&P Industrials.

The oil and natural gas industry needs healthy earnings to remain competitive and to benefit its shareholders, most of whom are Americans who own industry stocks in their 401K plans, pensions, IRAs and mutual funds. Healthy earnings also allow the industry to invest in energy development and production as well as innovative technologies that protect the environment. 

API has assembled a primer that addresses these issues. View the full primer to learn more about industry earnings.