Jobs in the oil and gas industry have helped U.S. employment numbers claw back from steep losses over the last decade, according to a new report from the Small Business & Entrepreneurship Council.
From 2005 to 2012, U.S. employers shed 378,000 jobs, but over the same period, five oil and gas sectors — extraction, drilling, operations, pipelines and equipment manufacturing — added a combined 293,000 jobs.
Employment at oil and gas operations businesses more than doubled during that decade-long span, and equipment manufacturing and pipelines each grew about 66 percent.
The report also noted that despite the attention heaped on the biggest players in oil and gas, businesses with a few hundred employees made up the vast majority of firms among the industries it profiled. In extraction, where smaller contractors dominate the oil field, 98.5 percent of firms in the industry had fewer than 500 employees.
The SBEC also used the report’s findings to level criticism against U.S. restrictions on liquefied natural gas exports to non free-trade agreement countries, and in particular at calls from those in the refining and petrochemical industry to keep the restrictions in place.
“While arguments have come from some circles that LNG exports would hurt domestic businesses that use natural gas as an industrial input, Economics 101 reminds us that the economy is not a zero-sum game,” the SBEC wrote in the report. “Therefore, expanded demand for U.S. natural gas in international markets will result in greater U.S. natural gas production, increased investment, enhanced GDP growth, rising incomes, and more jobs – just as is the case with increasing exports in other U.S. industries, including those that utilize natural gas.”
But at the same time that the industry’s smallest operators were benefiting from the oil and gas surge, independent companies could be the first to feel the sting from plunging oil prices.
“A lot of independents tend to spend above their cash flow,” Jim Burkhard, the head of global oil market research for energy analyst firm IHS, told the Houston Chronicle in October. “They depend on external financing, so when oil prices fall to a point where external financing isn’t available, or is too expensive, then they have to cut back.”
Drilling activity in the United States may have already hit a wall because of falling oil, which is now hovering below $80 per barrel. In the middle of October, the rig count in the U.S. dropped by 19, the steepest drop in two months.