SMALL BUSINESS INSIDER: Energy Progress Driven by Entrepreneurs and Innovation

By at 19 January, 2020, 10:30 am

The Nation’s Small Businesses Have Contributed Significantly to U.S. Energy Independence

by Karen Kerrigan

The United States leads the world in petroleum and natural gas production, and our entrepreneurs and small businesses have played a major role in this recent ascent to dominance. Energy prices have become more stable for small businesses, which means less uncertainty. That means small business resources can be dedicated to hiring, investment and growth. Moreover, America’s energy revolution has provided opportunity in areas of the country that desperately need an economic driver, restoring communities and hope to many citizens through quality jobs and new business creation. In short, energy development has been a catalyst for economic growth, entrepreneurship, independence in a tumultuous world, and innovative technologies that have produced more efficiencies and practices that are making our environment cleaner.

This good news story was shared on January 7, at the American Petroleum Institute’s (API’s) State of American Energy 2020 event. Following API CEO Mike Sommers’s keynote address, I shared the small business perspective, including the impact entrepreneurs have made in this critical industry. My fellow panelists – Mike Rowe (yes, the Dirty Jobs guy); Terry O’Sullivan, General President of Labor International Union of North America (LIUNA); Leslie Beyer, President of Petroleum Equipment and Services Association (PESA); and moderator Debra Philips, API’s Senior Vice President of Global Industry Services – discussed various elements of the energy-sector ecosystem and how pro-energy policies are good for our economy, its workers, small business creation and growth, and the environment.

(You can watch the full panel discussion by clicking here, or on the image below.)

First, a review of the numbers. The U.S. energy sector is dominated by small businesses (U.S. Census Bureau 2016 data):

●  Among oil and gas extraction businesses: 89.5% of employer firms have fewer than 20 employees; and 96.4% fewer than 100 employees.

●  Drilling oil and gas wells businesses: 81.6% of employer firms have fewer than 20 workers; and 94.9% fewer than 100 employees.

●  Support activities for oil and gas operations businesses: 83.4% of employer firms have fewer than 20 employees; and 95.7% fewer than 100 employees.

●  Oil and gas pipeline and related structures construction businesses: 60.6% of employer firms have fewer than 20 workers; and 84.4% fewer than 100 employees.

●  Oil and gas field machinery and equipment manufacturing businesses: 56.5% of employer firms have fewer than 20 employees; and 82.9% fewer than 100 employees.

●  Of employer firms in coal mining: 67.3% have fewer than 20 workers; and 85.1% fewer than 100 employees.

●  Support activities for the coal mining sector: 68.8% of employer firms have fewer than 20 employees; and 86.9% fewer than 100 employees.

●  Coal and other mineral and ore merchant wholesalers: 82.6% have fewer than 20 employees; and 90.4% fewer than 100 employees.

Indeed, this is an industry dominated by small businesses, entrepreneurs and self-employed Americans. And this dominance and diversity is a critical reason why the industry is highly innovative.

As I noted in my remarks during the API panel, pro-investment policies are necessary to fuel more innovation. Moreover, the explosive growth of the energy industry has enabled diversity within various sectors, as more women and minority entrepreneurs are finding significant success across sectors. This was a key point I made during the panel discussion, and why diversity is a critical source for innovation.

Other points I made during the panel discussion included:

●  “U.S. energy has been the long-term, consistent good news economic story, and small businesses have benefitted from that both as consumers in the marketplace and as small businesses within the industry.”

●  “It’s the small businesses that are driving innovation in this industry, and I love seeing…all the women entrepreneurs in this industry. Obviously, women’s entrepreneurship is booming, and the opportunity to have women engage in this industry brings more diversity and is very important to innovation. Diversity fuels innovation, which will help…take the energy industry to the next level.”

●  “With respect to cost, that’s the big thing for businesses – all businesses – but for small businesses to have this consistency…to have stable and consistent costs is so important for small businesses in terms of allowing them to invest, compete, to hire, to do all the things that they do best to keep our economy growing.”

The panel discussion focused on the many policies impacting the sector – the good, the bad and the ugly. Bans on fracking are misguided across the board, and various existing or proposed regulations that drive costs higher or burden infrastructure projects with long terms delays (10, 15, 20 years or more).

As noted by Leslie Beyer of PESA: “To ban fracking would mean banning a technology that has bolstered us geopolitically, economically and environmentally.”

We touched on other policies that would drive investment and growth, such as trade and support for USMCA (and no tariffs), along with competitive and stable tax policy. Since the panel occurred prior to President Trump’s announcement on proposed National Environmental Policy Act (NEPA) changes, we talked about this encouraging development that would help to fix the absurdly long and costly delays for permits on infrastructure projects. (See SBE Council’s media release on the Jan 9, White House announcement on NEPA here.)

With regard to policies in general LIUNA’s Terry O’Sullivan said politicians have to be less spineless and more levelheaded when it comes to energy policies:

“We have too many gutless politicians here in Washington, D.C. and across the country that are pandering to extremists on all fronts. Who are licking their fingers to see which way the political winds are blowing instead of talking with us in this sector – business, labor, suppliers and the like – to figure out how we move our energy policy forward.”

Sound policies, said O’Sullivan, will boost the industry in a positive way as the nation has only just begun “scratching the surface of this energy renaissance,” where jobs in the industry “are a pathway to the middle class” providing “hope, opportunity, good wages, with good benefits.”

Since our founding 25 years ago, SBE Council has actively engaged on energy policy given how importance affordability, independence, innovation and abundance are to small businesses. It is remarkable where the United States stands currently, compared to 25 years ago, and looking back even further to 1977 when President Jimmy Carter addressed the nation to warn Americans about our bleak energy future:

“The oil and natural gas we rely on for 75 percent of our energy are simply running out. In spite of increased effort, domestic production has been dropping steadily at about 6 percent a year. Imports have doubled in the last five years. And our nation’s economic and political independence is becoming increasingly vulnerable.”

What a different world we actually live in! And that’s primarily due to the optimistic and hard-working Americans who are driving this industry forward in a positive way, not only for our country but for the rest of the world.

Read API’s State of American Energy 2020 report here.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.


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