Independent Producers Remain at the Heart of the U.S. Shale Story

The Small Business & Entrepreneurship Council (SBEC) recently released a report, which highlights the benefits of natural gas production for small businesses. The SBEC’s findings show that, thanks to booming oil and gas production, small businesses have been able to thrive in difficult times, even while other sectors fell behind.  From the report:

“The increased [natural gas] production has been good news for the energy sector, including for employment and business growth (especially small and midsize businesses), especially in those states where natural gas production has expanded. The excellent performance of the oil and natural gas sectors of our economy stands in sharp contrast to the gross underperformance of the overall economy since 2007.” (p. 1)

The SBEC took a look at the five main sectors of the oil and gas industry: oil and gas extraction, drilling, support for oil and gas operations, oil and gas pipeline and related structures construction, and field machinery and equipment manufacturing.

According to the SBEC, between 2005 and 2011, U.S. total employer firms declined by 5.0 percent, including a 4.7 percent decline in firms with less than 20 workers, and a 5.0 percent fall in firms with less than 500 workers. But let’s breakdown the oil and gas sector:

  • Extraction jobs grew by 46.1 percent.
  • Drilling jobs grew by 61.0 percent.
  • Industry-supporting jobs grew by 100.2 percent
  • Oil and gas pipeline construction jobs grew by 66.1 percent.
  • Field machinery and equipment manufacturing grew by 67.1 percent.

More broadly, during this time as U.S. employers shed hundreds of thousands of jobs, the oil and gas sector created hundreds of thousands of jobs.  From the report:

“While U.S. employers overall shed more than 378,000 jobs over this period, employers in the five energy industries included here directly added more than 293,000 jobs (that is, direct jobs in each sector without factoring in broader indirect jobs tied to expanded production and reduced prices).” (p. 1)

This tremendous growth is even more extraordinary when we focus on small operators. U.S. firms with fewer than 20 employees experienced a 4.7 percent decline, while firms with fewer than 500 employees also experienced a five percent fall. Even though the majority of industries during the recession experienced hardship, small and midsize oil and gas companies were outliers. As the SBEC reports:

  • Extraction jobs grew by 4.9 percent, including 4.1 percent among firms with less than 20 workers and 4.8 percent among firms with less than 500 workers.
  • Drilling jobs grew 7.9 percent among firms with less than 20 workers and 11.3 percent among firms with less than 500 workers.
  • Industry-supporting jobs grew by 31.3 percent, including 29.1 percent among firms with less than 20 workers and 31.3 percent among firms with less than 500 workers.
  • Oil and gas pipeline and related structures construction businesses, grew by 12.2 percent among firms with less than 20 workers, and 12.5 percent among firms with less than 500 workers.
  • Field machinery and equipment manufacturing jobs grew 15.0 percent, including 8.5 percent among firms with less than 20 workers and 14.7 percent among firms with less than 500 workers. (p.1)

This latest report is yet another reminder that shale development has been a game changer for the U.S. economy, fueling incredible job growth and putting the country on the path to economic recovery.

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