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March 1992, Vol. 115, No. 3
Brian L. Friedman
P roductivity (as measured by output per employee hour) in the crude petroleum and natural gas production industry declined at an average annual rate of 1.1 percent from 1959 to 1990.1 (See table 1.) Productivity growth was hampered by increasingly difficult access to new oil and gas supplies over the period. Productivity was also strongly affected by the volatile rise and fall of the price of oil and related products, which influenced the economic feasibility of employing more marginal and labor-intensive types of recovery. Productivity declined during the period as labor increased in times of high prices, while output growth was slowed by diminishing reservoir pressure in existing oil fields.
There were three distinct periods of economic activity that produced different productivity trends during 1959-90: 1959-72, a period of increasing production and low prices; 1972-82, a period of declining production despite the incentives of high world oil prices and technological advances; and 1982-90, a period of predominately declining prices and continued declining production. The following tabulation lists the average annual rates of change for three productivity-related variables during the three separate subperiods of the period under study:
|Annual percent change|
|Output per hour..||5.4||-7.8||3.6||-1.1|
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1 The crude petroleum and natural gas industry (SIC 1311) includes establishments engaged primarily in operating oil and gas fields and related properties. There are some drilling and geophysical exploration activities encompassed by SIC 1311, but these activities generally involve less than 10 percent of industry production workers. The results of these activities, in terms of feet drilled or new reserves found, are considered intermediate outputs to the oil and gas produced. The productivity and related measures for SIC 1311 are intended to measure only oil and gas production, and not exploration and drilling activity, in the U.S. oil industry. The great majority of exploration and drilling activity in the U.S. oil industry is done by employees from SIC 138, oil and gas services, which are not included in the measures of productivity and employment presented in this article.
The average annual rates of change reported here are based on the linear least squares trend of the logarithms of the index numbers. Extensions of the indexes will appear in the annual Bureau of Labor Statistics bulletin, Productivity Measures for Selected Industries and Government Services.
Productivity in the wood containers industries, 1977-89. October 1992.
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