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New report puts numbers on natural gas job growth

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Times are tough all over. Except, that is, in the natural gas industry.

Nestled among the headlines of job losses and a weak economy are increases in businesses and jobs in one sector.

A new report from Raymond Keating, chief economist of the Small Business and Entrepreneurship Council, shows the stark contrast.

"It's fun talking about this issue in a bad economy, because I'm an optimist at heart," Keating said. "The increase in natural gas production nationally is a 27 percent increase from 2005 to 2011. 

"In West Virginia, the increase over that same time period is almost 80 percent."

Small business perspective

Keating spoke to a small group of lawyers, business owners and natural gas industry insiders July 15 in Charleston. He said the council has 100,000 members throughout the country, representing home-based businesses, tech firms, manufacturing and energy. It identifies itself as a nonpartisan, nonprofit organization for advocacy, research and education.

The latest report, released in early May, tracked the growth in the energy sector between 2005-2010. 

He said the council looks at "a whole host of issues" from a small business perspective, and an important distinction to make is that industries the public typically thinks of as "big," such as "big oil," or "big pharmaceuticals," are actually most often made up of many small firms.

"When you look at each sector (of the natural gas industry), roughly 75 to 80 percent of the establishments have less than 20 employees," Keating said. "So when you're talking about energy, you're talking about small business."

Stark contrast

According to the report, while total U.S. employer firms declined from 2005-2010, the number of employer firms grew by 3.1 percent among oil and gas extraction businesses; by 7.2 percent among drilling oil and gas well businesses; by 5.1 percent among oil and gas pipeline and related structure construction businesses; and by 61 percent among oil and gas field machinery and equipment manufacturing businesses.

Those numbers parallel West Virginia's statistics. Total employment in West Virginia declined from 2005-2010, but West Virginia jobs grew by 44.2 percent in the oil and gas extraction sector; by 9.4 percent in the drilling oil and gas wells sector; and by 99 percent in the support sector for oil and gas operations, according to the report.

West Virginia's natural gas production expanded by 78.2 percent from 2005-2011.

Keating said the report did not address the ripple effect experienced in the dry cleaning shops and sandwich marts because of the extra business that is generated by the growing energy sector.

Pressure on the way

Keating said the Small Business and Entrepreneurship Council wants to see the free market work without government getting in the way, but he's seen the Department of Energy wait on permit decisions for two years. 

"I teach MBA students," Keating said, and his classes debate whether exports are good. "On both sides of the political aisle, maybe they disagree on imports, but they can almost always all agree the exports are a good thing."

Keating said coal has been the No. 1 target of the Environmental Protection Agency and President Barack Obama, but Keating thinks there is "hostility toward any carbon-based energy," so natural gas isn't entirely safe.

"One of the things we're looking at is trying to send a message that you're not only raising problems and costs for big oil, big coal, big gas," he said. "You're raising issues for the small business community in two ways: on the supply side … then obviously as consumers."

He said opportunity exists for exporting liquefied natural gas because of the big difference in natural gas prices from the U.S. and everywhere else in the world, coupled with the rising global demand. And, Keating was quick to point out the trickle-down effect that growing opportunity will create for small and midsized businesses to start up and expand, similar to the pattern his study has tracked in the natural gas industry.

"Looking ahead, there's no reason to argue that it's going to be any different in terms of job growth and business growth if we really take advantage of opportunities," he said.

Valuable feedback

Keating said the discussion in Charleston was valuable for him because he got to hear from people in the industry.

"To me, it's always more interesting to talk to people on the ground, in terms of what they're seeing, and confirmation that opportunity does very much exist," he said. "I'm always looking for what people are thinking and doing in the industry itself.

"I can pull out numbers, and hopefully we're adding to the discussion."

He said one of the challenges for all the industries the council covers is fighting the impression that an industry is only the "big guys," and this report is one step in the right direction.

"The big guys are there, the big guys matter, and that's all good, but we just want people to understand this is very much an industry populated by small firms," he said. "It's not just the big guys; it's a whole host of entrepreneurs."