Quantum Communications, Harrisburg, PA
Natural gas production is making a world of difference to the Pennsylvania economy and things have only just begun. LNG will take things to another plane.
Those living in Pennsylvania’s energy producing communities have seen – and in many cases have been part of – the countless small business turnarounds and entrepreneurial successes as the commonwealth’s natural gas production surges. A new study by the Small Business and Entrepreneurship Council’s Chief Economist Ray Keating quantifies the benefits to small business thanks to Pennsylvania energy production.
Keating’s new analysis examines natural gas production in the U.S. and several states, including Pennsylvania, between 2005 and 2012. In Pennsylvania, Keating finds that as production increased by 1,239% in the seven-year period, the true beneficiaries were small businesses.
Overall, Pennsylvania lost 2% of its businesses with 500 or less employees between 2005 and 2012. However, the following Pennsylvania energy sectors – businesses with 500 or less employees – bucked that disappointing statewide trend:
- Oil/Gas Extraction Employers increased by over 37%
- Oil and Gas Pipeline and Related Structures Construction Establishments increased by over 42%
- Drilling Oil and Gas Wells Establishments increased by nearly 96%
- Support for Oil and Gas Operations Establishments went up a staggering 236%
So while overall employer establishments declined in Pennsylvania, the energy sector contributed to significant growth for its supply chain small businesses. These statistics affirm Governor Corbett’s energy equals jobs equation. One of the variables in that equation, which could further spur energy jobs for small businesses, is liquefied natural gas (LNG) exports.
“Expanding LNG exports would be the icing on the cake by encouraging future investments and the creation of even more businesses and jobs in our thriving energy sector,” said Ray Keating in conjunction with releasing his study, Benefits of Natural Gas Production and Exports for U.S. Small Businesses: Nationally and Key States.
Keating’s study comes on the heels of the Energy Information Administration’s (EIA) October follow-up report to its January 2012 study of LNG export scenarios. The assessment by the Small Business and Entrepreneurship Council dovetails with EIA. Such as EIA’s findings that: “natural gas markets in the United States balance in response to increased LNG exports mainly through increased natural gas production”; and, that “increased energy production spurs investment, which more than offsets the adverse impact of somewhat higher energy prices when the export scenarios are applied.”
In short, reducing the barriers to LNG exports increases domestic production and maximizes investment. Just as small businesses have seen enormous benefit from the domestic energy revolution of the past ten years, small businesses will benefit from reducing unnecessary bureaucracy around LNG exports in the years to come.
Outside of policy barriers, LNG export facilities are very expensive and take years to construct. Additionally, there are only so many countries looking to import natural gas, and the U.S. is not the only natural gas producing country with the ability to export. So it’s vital the U.S. (and by extension Pennsylvania) leverage its first-mover advantage.
More energy exports mean more energy investment leading to the continued growth of oil and gas related small businesses in Pennsylvania. By allowing the free market to determine which American LNG export facilities are built – and removing government’s hand – we can ensure Pennsylvania’s energy revolution continues uninhibited.
Scott Staruch leads the energy practice at Quantum Communications. He can be reached at email@example.com and at @ScottStaruch.
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