PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

NEW STUDY: Oil, Natural Gas, Our Economy and Small Business

By at 22 May, 2023, 2:44 pm

by Raymond J. Keating –

While the Biden White House and their allies in Congress actively work to undermine the oil and natural gas sector, such efforts effectively serve to undermine the U.S. economy and small businesses.

The American Petroleum Institute has just published a PWC study titled “Impacts of the Oil and Natural Gas Industry on the US Economy in 2021,” which attempts to quantify the widespread and significant impact that the oil and natural gas sector has on the U.S. economy.

As noted in the report, the effects of oil and natural gas are measured via three channels: “direct impacts from the employment and production within the oil and natural gas industry; indirect impacts through the industry’s purchases of intermediate and capital goods from a variety of other US industries; and induced impacts from the personal purchases of employees and business owners both within the oil and natural gas industry and its supply chain, as well as from the personal spending by shareholders out of the dividends received from oil and natural gas companies.”

The findings should be noted by elected officials, their appointees and staff, and the public at large:

● “In 2021, the oil and natural gas industry directly provided 2.3 million jobs for American workers, paid $278.5 billion in wages and salaries and benefits and proprietors’ income, and generated $773.6 billion in GDP. The industry’s direct national impact on the US jobs, labor income, and value added ranged from 1.1 percent to 3.3 percent in 2021.”

● As for the total – i.e., direct and indirect – economic impact of the oil and natural gas industry, the following chart from the study sums matters up:

All should take note of those bottom line numbers, i.e., 10.8 million jobs, $908.7 billion in labor income, and $1.8 trillion in total economic value added.

For good measure, the PWC provides estimated economic impact data by state. While all 50 states obviously accrue economic benefits from the oil and natural gas industry, the following two charts show the states where the total effects are largest:

Oil and Natural Gas = Small Business. Finally, the publication of this study means that this is the opportune time for SBE Council to remind all about the role of small businesses in this critical sector: small businesses overwhelmingly populate the firms at work in the oil and natural gas industries, in the sectors that serve those industries, and in key industries served by oil and natural gas.

The following are the percentage breakdowns of employer firms by number of employees in a variety of these sectors (2019 data latest from the U.S. Census Bureau, calculations by the author):

Oil and Gas Extraction Sector

     Percent of Firms by Number of Employees

Fewer than 10 employees

     81.4%

Fewer than 20 employees

     89.1%

Fewer than 100 employees

     95.6%

Fewer than 500 employees

     98.1%

Drilling Oil and Gas Wells

        Percent of Firms by Number of Employees

Fewer than 10 employees

        69.8%

Fewer than 20 employees

        79.6%

Fewer than 100 employees

        93.2%

Fewer than 500 employees

        97.2%

Support Activities for Oil and Gas Operations

       Percent of Firms by Number of Employees

Fewer than 10 employees

       69.4%

Fewer than 20 employees

       80.2%

Fewer than 100 employees

       94.4%

Fewer than 500 employees

       98.4%

Oil and Gas Pipeline and Related Structures Construction

   Percent of Firms by Number of Employees

Fewer than 10 employees

   42.7%

Fewer than 20 employees

   56.7%

Fewer than 100 employees

   83.4%

Fewer than 500 employees

   94.2%

Oil and Gas Field Machinery and Equipment Manufacturing

   Percent of Firms by Number of Employees

Fewer than 10 employees

   40.4%

Fewer than 20 employees

   55.5%

Fewer than 100 employees

   80.2%

Fewer than 500 employees

   89.8%

Pipeline Transportation of Crude Oil

    Percent of Firms by Number of Employees

Fewer than 10 employees

    38.6%

Fewer than 20 employees

    47.0%

Fewer than 100 employees

    55.4%

Fewer than 500 employees

    59.0%

Pipeline Transportation of Natural Gas

   Percent of Firms by Number of Employees

Fewer than 10 employees

   39.3%

Fewer than 20 employees

   49.6%

Fewer than 100 employees

   58.1%

Fewer than 500 employees

   64.1%

Pipeline Transportation of Refined Petroleum Products

  Percent of Firms by Number of Employees

Fewer than 20 employees

  43.6%

Fewer than 100 employees

  49.3%

Fewer than 500 employees

  54.9%

Gasoline Stations 

     Percent of Firms by Number of Employees

Fewer than 10 employees

     80.1%

Fewer than 20 employees

     93.3%

Fewer than 100 employees

     98.6%

Fewer than 500 employees

     99.6%

Petroleum Refiners 

    Percent of Firms by Number of Employees

Fewer than 20 employees

    20.0%

Fewer than 100 employees

    25.0%

Fewer than 500 employees

    37.5%

Petroleum Lubricating Oil and Grease Manufacturing

     Percent of Firms by Number of Employees

Fewer than 10 employees

     37.9%

Fewer than 20 employees

     52.5%

Fewer than 100 employees

     74.6%

Fewer than 500 employees

     86.3%

Petroleum and Petroleum Products Merchant Wholesalers

  Percent of Firms by Number of Employees

Fewer than 10 employees

  51.5%

Fewer than 20 employees

  66.1%

Fewer than 100 employees

  87.1%

Fewer than 500 employees

  95.5%

Plastics Product Manufacturing

     Percent of Firms by Number of Employees

Fewer than 10 employees

     38.2%

Fewer than 20 employees

     53.0%

Fewer than 100 employees

     81.2%

Fewer than 500 employees

     93.5%

In the end, the oil and natural gas industry is vital to the U.S. economy, to U.S. competitiveness, to U.S. jobs, and to U.S. small businesses. When politicians and activists undermine oil and natural gas with excessive regulation and taxes, the reality is that the American economy, local economies, jobs and small business success are all being harmed.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.

 

News and Media Releases