SOURCE OF JOB GROWTH
T
he contribution of the oil and gas industry to the local economies of Texas can be
understood in the context of a measure called Location Quotient (LQ). An industry’s
Location Quotient measures how concentrated that industry is in a region relative to a
larger geographical area, such as the nation. Location quotients reveal the industries that
make a region unique. For the oil and gas industry, its LQ can be measured as the ratio of that
industry’s share of total employment in a local area over the same oil and gas industry’s share of
employment in the United States.
The vertical axis of the accompanying scatter plot shows the oil and gas industry’s LQ for all
254 Texas counties in 2014. The oil and gas drilling industry includes activities directly involving
oil and gas drilling and extraction, and their support activities. An LQ greater than one indicates
that the oil and gas industry accounts for relatively more employment in a particular county than
in the nation. The Location Quotient is greater than one for 159 of the 254 Texas counties.
Oil & Gas LQ vs. Texas County Growth
OIL IMPACTS
Sources: EMSI, Bureau of Labor Statistics, and author’s calculations.
Annual Review of South Texas Economy
19